Plenty of response to the House passing legislation that gives shareholders a non-binding say on executive compensation.

In his Ideoblog, Professor Larry Ribstein describes it as an attempt to increase union power, reduce the efficiency of executive compensation, and usurp the states' role in corporate governance:

"Efficient compensation must be crafted on an individual-by-individual and firm-specific basis to provide the right incentives and attract the best people. It's like designing a product. Can anybody seriously believe that shareholders en masse can make a meaningful, intelligent, up-or-down decision on executive compensation?"

Just a misguided leftist attack on capitalism, says Townhall.com columnist Tom Borelli:

"Like many Left-wing positions, 'excessive' compensation is selectively applied to business leaders while sports stars and Hollywood entertainers are immune from attack. For example, in baseball, salaries are exploding with 11 contracts paying over $100 million. alex rodriguez of the New York Yankees is the highest paid player with a 10-year $252 million deal. In Hollywood, Oprah Winfrey is a billionaire and makes an estimated $225 million annually ... Clearly, corporate executives are well compensated and some are overpaid. However, the best way to address this issue is through existing free-market mechanisms on a case-by-case basis and not thorough the one size fits all federal regulation."

President Bush has already indicated that he opposes the "say on pay" measure but the reality is that non-binding votes on executive compensation are now standard practice in other countries like Great Britain and Australia. The US is just catching up with the rest of the world.

Despite the warnings, an ISS Proxy report tells us that the votes in other jurisdictions strengthened pay for performance linkages and improved board accountability and dialogue with shareholders.

But the key point is this: pay levels have continued to ratchet up. Giving shareholders a say on pay is not going to stop that from happening.

Watching the debate unfold in the US left me with some sense of deja vu. Certainly when these moves were introduced in other countries, business was screaming that it was the end of the world as we know it. It wasn't.

But where it's been introduced, it's had a big impact on boards. The vote is non-binding but if it keeps happening, boards know that it will spill over into fights on other matters, including the re-election of incumbent directors.

That's something I have looked at here.