Does Say on Pay Matter? Evidence from Say-on-Pay Proposals in the United States

38 Pages Posted: 25 Feb 2010 Last revised: 24 Apr 2012

See all articles by Natasha Burns

Natasha Burns

University of Texas at San Antonio - Department of Finance

Kristina Minnick

Bentley University

Date Written: May 1, 2010

Abstract

We investigate the effect of say-on-pay (SOP) proposals on changes in executive and director compensation. Relative to non-SOP firms, SOP firms’ total compensation to CEOs does not significantly change after the proposal. Although the total compensation does not change, the mix of compensation does change – companies move away from using cash compensation toward more incentive compensation, offsetting the reduction in bonus. Further, the mix of compensation of non-CEO executives changes similarly to that of CEOs. Compensation to directors of SOP firms increases significantly less than non-SOP firms’. Firms whose CEOs are well compensated, especially with cash-based compensation, are most likely to receive a proposal.

Keywords: Say on Pay, Compensation, Shareholder activism

JEL Classification: G3, G34, G38, K22

Suggested Citation

Burns, Natasha and Minnick, Kristina, Does Say on Pay Matter? Evidence from Say-on-Pay Proposals in the United States (May 1, 2010). Available at SSRN: https://ssrn.com/abstract=1558435 or http://dx.doi.org/10.2139/ssrn.1558435

Natasha Burns

University of Texas at San Antonio - Department of Finance ( email )

San Antonio, TX 78249
United States
210-458-6838 (Phone)

Kristina Minnick (Contact Author)

Bentley University ( email )

175 Forest Street
Waltham, MA 02154
United States

HOME PAGE: http://www.profminnick.com/

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