Say on Pay Votes and CEO Compensation: Evidence from the UK
Columbia Business School - Accounting, Business Law & Taxation
David A. Maber
The Stephen M. Ross School of Business at the University of Michigan
November 24, 2011
Review of Finance, Forthcoming
We examine the effect of say on pay regulation in the United Kingdom (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.
Number of Pages in PDF File: 62
Keywords: say on pay, shareholder votes, CEO compensation, shareholder activism
JEL Classification: G34, G38, J33, M12Accepted Paper Series
Date posted: April 26, 2010 ; Last revised: November 25, 2011
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