Nay to "Say-On-Pay" - Sudipto Dasgupta, Chair Professor of Finance

Sudipto Dasgupta, Chair Professor of Finance, HKUST, said at a seminar on 10 December in Central that attempts in making executive compensation arrangements entirely transparent are counter-productive. This is because shareholders can never have full information about the circumstances surrounding pay setting, and boards may risk shareholder outrage even when pay practices are in shareholder interest. Boards need discretion in deciding CEO pay and giving shareholders significant say in the pay process is likely to create inefficiencies.

Prof. Dasgupta also said regulating pay is ineffective although it may be seen as an easier alternative to regulating risk. "CEO pay levels will be best set by a well-functioning board of the individual companies. It is impossible for regulators to know what would be the right level of pay for executives in each company," he said.

Prof. Dasgupta was speaking at the HKUST Business Insights Presentation Series luncheon seminar on 10 December. The luncheon seminar is a monthly event and the next one will be held on 7 January, taking "Marketing" as the theme.