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Say on Pay Votes and CEO Compensation: Evidence from the UK

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  • Fabrizio Ferri
  • David A. Maber

Abstract

We examine the effect of say on pay regulation in the UK. Consistent with the view that shareholders regard say on pay as a value-creating mechanism, the regulation's announcement triggered a positive stock price reaction at firms with weak penalties for poor performance. UK firms responded to negative say on pay voting outcomes by removing controversial CEO pay practices criticized as rewards for failure (e.g., generous severance contracts) and increasing the sensitivity of pay to poor realizations of performance. Copyright 2013, Oxford University Press.

Suggested Citation

  • Fabrizio Ferri & David A. Maber, 2013. "Say on Pay Votes and CEO Compensation: Evidence from the UK," Review of Finance, European Finance Association, vol. 17(2), pages 527-563.
    • Handle: RePEc:oup:revfin:v:17:y:2013:i:2:p:527-563
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    File URL: http://hdl.handle.net/10.1093/rof/rfs003
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