'Say-on-Pay' Votes and Compensation Practices

39 Pages Posted: 15 Jan 2014

See all articles by Jenny Li Zhang

Jenny Li Zhang

University of British Columbia - Sauder School of Business

Kin Lo

University of British Columbia (UBC) - Sauder School of Business

Shuo Yang

University of British Columbia (UBC) - Division of Accounting

Date Written: January 6, 2014

Abstract

We examine the causes and consequences of “say-on-pay” votes mandated by the Dodd-Frank Act of 2010. We hypothesize and find that shareholder disapproval increases with the amount of total and abnormal compensation, decreases with the number of pay-restraining provisions, and decreases with the quality of compensation disclosures. Shareholder disapproval also correlates with contemporaneous director turnover. We also find that boards respond to shareholder disapproval by amending compensation policies to reduce that opposition. Such alterations do have the hypothesized effect of reducing the amount of shareholder dissent for the following year.

Keywords: Say-on-Pay, compensation disclosure

JEL Classification: M41

Suggested Citation

Zhang, Jenny Li and Lo, Kin and Yang, Shuo, 'Say-on-Pay' Votes and Compensation Practices (January 6, 2014). 2014 Canadian Academic Accounting Association (CAAA) Annual Conference. Available at SSRN: https://ssrn.com/abstract=2377093 or http://dx.doi.org/10.2139/ssrn.2377093

Jenny Li Zhang (Contact Author)

University of British Columbia - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

Kin Lo

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8430 (Phone)
604-822-9470 (Fax)

HOME PAGE: http://www.sauder.ubc.ca/Faculty/People/Faculty_Members/Lo_Kin

Shuo Yang

University of British Columbia (UBC) - Division of Accounting ( email )

2053 Main Hall
Vancouver, British Columbia V6T 1Z2
Canada

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