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Say-on-Pay: Is Anybody Listening?

Author

Listed:
  • Stephani A. Mason

    (DePaul University, USA)

  • Ann F. Medinets

    (Rutgers Business School, USA)

  • Dan Palmon

    (Rutgers Business School, USA)

Abstract

There is an ongoing debate about whether executives receive excessive compensation, and if so, how to control it. Several countries have instituted say-on-pay rules (shareholders' right to vote on executive compensation) to reduce excessive compensation. However, determining the effectiveness of say-on-pay is difficult because its tenets vary by country due to political, institutional, cultural, economic, and social factors. Policy issues like say-on-pay are complex, ill-structured problems without definitive assumptions, theories, or solutions. Existing say-on-pay research is inconclusive, since some studies find no change in CEO compensation around its adoption, whereas other studies show that say-on-pay lowers CEO pay or changes its composition. This paper chronicles the history of say-on-pay, compares its implementation by groups (e.g. shareholders-initiated versus legislated and binding versus advisory), discusses the complexities of using say-on-pay to address excessive executive compensation, and recommends future research directions.

Suggested Citation

  • Stephani A. Mason & Ann F. Medinets & Dan Palmon, 2016. "Say-on-Pay: Is Anybody Listening?," Multinational Finance Journal, Multinational Finance Journal, vol. 20(4), pages 273-322, December.
    • Handle: RePEc:mfj:journl:v:20:y:2016:i:4:p:273-322
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    Citations

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    Cited by:

    1. Steven S. Crawford & Karen K. Nelson & Brian R. Rountree, 2021. "Mind the gap: CEO–employee pay ratios and shareholder say‐on‐pay votes," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(1-2), pages 308-337, January.
    2. Joura, Essam & Xiao, Qin & Ullah, Subhan, 2021. "The impact of Say-on-Pay votes on firms' strategic policies: Insights from the Anglo-Saxon economy," International Review of Financial Analysis, Elsevier, vol. 73(C).

    More about this item

    Keywords

    executive compensation; say-on-pay; compensation regulation; shareholder activism; shareholder proposals; corporate governance;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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