Does Say‐On‐Pay Matter? Evidence from Say‐On‐Pay Proposals in the United States
26 Pages Posted: 5 Apr 2013
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: Suggested Citation
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Does Say‐On‐Pay Matter? Evidence from Say‐On‐Pay Proposals in the United States
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