Does Say on Pay Matter? Evidence from Germany

SAFE Working Paper No. 125

40 Pages Posted: 29 Jan 2016 Last revised: 17 Apr 2019

See all articles by Tobias H. Troeger

Tobias H. Troeger

Leibniz Institute for Financial Research SAFE; European Corporate Governance Institute (ECGI); European Banking Institute

Uwe Walz

Goethe University Frankfurt - Institute of Economics; Center For Financial Studies (CFS); Leibniz Institute for Financial Research SAFE

Date Written: April 1, 2019


We analyze a hand-collected dataset of 1682 executive compensation packages at 34 firms included in the main German stock market index (DAX) for the years 2009-2017 in order to investigate the impact of the 2009 say on pay legislation. The findings provide important insights beyond the German case, not only for the impending implementation of the revised European Shareholder Rights Directive. First, we observe that the compensation packages of management board members of Germany’s DAX30-firms are closely linked to key performance measures such as return-on-assets and size. Second, and most important for our topic, our findings suggest that it is essential to take a closer look at the contractual set-up for the compensation schemes and their structure. When we only consider the compensation packages of all board members, the hypothesis that remuneration is decreased if shareholder support for compensation schemes is low in say on pay-votes finds only weak support, if any at all. However, we find that the supervisory board is responsive to say on pay votes when it comes to the design of compensation packages for newly entering candidates, i.e. within the binding restrictions of contract law, it reacts as envisioned by policy makers. It is a consequence of the way say on pay is supposed to work that our results are driven by the rather few pronouncedly discontent say on pay-votes in corporate Germany – only where disapproval is voiced supervisory boards have reason to change compensation packages. They leave matters unaffected where shareholders show rather strong support for the proposed schemes as is the case in most of the observations in our dataset. Yet, it is important because it informs our understanding of the channels through which say on pay works. Our observations carry over to the general analytical approach for say on pay-regimes. Any evaluation of a shareholder voice-strategy in regulating executive remuneration has to pay close attention to the limits contract law stipulates for the adaptation of existing remuneration agreements and thus has to take a medium to longterm view that ideally extends to a full turnover-period for board-members.

Keywords: executive compensation, say on pay, Germany

JEL Classification: D23, G30, G34, J33, K22

Suggested Citation

Tröger, Tobias Hans and Walz, Uwe, Does Say on Pay Matter? Evidence from Germany (April 1, 2019). SAFE Working Paper No. 125, Available at SSRN: or

Tobias Hans Tröger

Leibniz Institute for Financial Research SAFE ( email )

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European Corporate Governance Institute (ECGI) ( email )

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European Banking Institute ( email )


Uwe Walz (Contact Author)

Goethe University Frankfurt - Institute of Economics ( email )

Postfach 81
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Center For Financial Studies (CFS) ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323

Leibniz Institute for Financial Research SAFE ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323

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