Changing social norms and CEO pay: the role of norms entrepreneurs

摘要

There is an overwhelming sense of outrage and anger at perceived excesses in CEO compensation ensuring regular coverage in the popular press, and making it, arguably, the most\udpressing question in current corporate law. There is scarcely a day when institutional\udshareholders, labor unions, politicians, and small investors are not calling for action to address\udthis alleged menace. Inevitably, the heightened scrutiny and often shrill advocacy has contributed\udto the apparent disesteem for CEOs, with some polls showing that only seventeen percent of the\udpublic expect CEOs to tell the truth, in contrast with twenty-five percent for members of the U.S.\udCongress. This state of affairs has fuelled a vigorous debate about the desirability of regulatory\udintervention to address the problem, with no discernible agreement about the nature and extent of\udregulation. The populist nature of the cause has prompted politicians to enter the fray and recent\udyears have seen activity in Congress and the SEC. Parallel to these developments, norms\udentrepreneurs have been active in creating social norms and enforcing them with social sanctions,\udwith some modicum of success, suggesting that regulatory intervention might be premature until\udthe ramifications of these actions are better understood.6 There is some evidence of apparent\uddeclines in executive compensation following the secondary enforcement of social norms. If\udexisting social norms can be leveraged or new norms can be created, the behavioral change\udnecessary for constraining CEO greed might be attained at a lower cost. This is salient in corporate law since the experience with legal sanctions has not been particularly satisfactory.\udThe law might also interact with social norms in salutary ways, a perception that might explain\udthe efforts by norms entrepreneurs and other actors to seek legislative intervention.