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

Review of Finance, Forthcoming

62 Pages Posted: 26 Apr 2010 Last revised: 25 Nov 2011

Date Written: November 24, 2011


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.

Keywords: say on pay, shareholder votes, CEO compensation, shareholder activism

JEL Classification: G34, G38, J33, M12

Suggested Citation

Ferri, Fabrizio and Maber, David A., Say on Pay Votes and CEO Compensation: Evidence from the UK (November 24, 2011). Review of Finance, Forthcoming. Available at SSRN:

Fabrizio Ferri (Contact Author)

Associate Professor ( email )

Coral Gables, FL 33146-6531
United States

David A. Maber

Cal Poly ( email )

Orfalea College of Business
San Luis Obispo, CA 93407
United States

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