'Say on Pay' : The Movement to Reform Executive Compensation in the United States and European Union

In the aftermath of an array of economic failures, there is a growing movement to reform executive compensation. Concerned that executive compensation structures reward inappropriate risk taking and create a short-term perspective, the United States and the European Union are taking steps to reform the ways executives are compensated. Part I analyzes governmental and regulatory action in the United States, including SEC disclosure rules and the recent Conference Report of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Part II details new initiatives in the European Union recommending changes to remuneration for directors of listed companies and remuneration in the financial services sector, as well as steps taken in EU Member States to implement specific changes. Inasmuch as the reform initiatives in the U.S. and EU create new responsibilities for shareholder participation in compensation, Part III sets forth considerations for shareholders for understanding 'pay for performance,' including access to accurate information, evaluation of the structure of the compensation incentives to align compensation with a company's strategy and long-term strategy for the creation of value