Does Say‐On‐Pay Matter? Evidence from Say‐On‐Pay Proposals in the United States

26 Pages Posted: 5 Apr 2013

See all articles by Natasha Burns

Natasha Burns

University of Texas at San Antonio - Department of Finance

Kristina Minnick

Bentley University

Date Written: May 2013

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. However, 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 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, executive compensation, corporate governance

JEL Classification: G34, G38, J33, M12

Suggested Citation

Burns, Natasha and Minnick, Kristina, Does Say‐On‐Pay Matter? Evidence from Say‐On‐Pay Proposals in the United States (May 2013). Financial Review, Vol. 48, Issue 2, pp. 233-258, 2013, Available at SSRN: https://ssrn.com/abstract=2245396 or http://dx.doi.org/10.1111/fire.12002

Natasha Burns (Contact Author)

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

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

Kristina Minnick

Bentley University ( email )

175 Forest Street
Waltham, MA 02154
United States

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

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