When Should Shareholders Say 'Yes' on Pay?

Abstract

With the opportunity to cast their vote on executive compensation in the companies they own, investors all over the industrialized world are getting a say on pay. In determining whether to support a company’s executive compensation program, investors should seek answers to three questions: Are the company’s pay and performance aligned over the long-term? Are the company’s benefits and severance programs reasonable? Do company executives have a sufficient enough mix of long-term incentives and own enough shares to align their interests with shareholders? Of course, say on pay voters will also want to ensure that both the pay opportunity is not excessive and that their company has a sound governance process relating to executive compensation.

Keywords: Say On Pay, Pay-for-Performance