Steve Kaplan, Columnist

Shareholders Are Giving CEOs the Right Pay: Business Class

June 30, 2011 at 10:18 PM UTC

Kaplan also is faculty director of Booth’s Polsky Center for Entrepreneurship. His papers on LBOs and private equity are the standard references in the field, and he has testified before House and Senate committees about his research. He is a research associate at the National Bureau of Economic Research and an associate editor of the Journal of Finance and the Journal of Financial Economics. He serves on the board of directors of Accretive Health, Columbia Acorn Funds, Morningstar and the Parking Spot.

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As always happens in the spring, companies reported the pay of their chief executive officers and other top leaders. And, as usual, the press and activists complained that CEOs are paid more and more, without regard for performance, and that boards aren't doing their jobs.

But there's a twist this year. The Say-on-Pay rules in the Dodd-Frank legislation required for the first time that shareholders vote on executive-pay packages. And to the surprise of many, those votes have been overwhelmingly positive. The pay policies at more than 98 percent of the companies in the Standard & Poor's 500 Index received majority shareholder support. Almost 90 percent of those companies received favorable votes exceeding 70 percent.