Shareholder Dissent on Say-on-Pay and CEO Compensation

34 Pages Posted: 16 Mar 2016

See all articles by Martin J. Conyon

Martin J. Conyon

Bentley University; Wharton School, Center for Human Resources

Date Written: March 16, 2016


The Dodd Frank Act (2010) empowered shareholders by mandating non-binding voting on executive compensation. This paper investigates the determinants of shareholder dissent on the say-on-pay proposal. Data on S&P1500 firms between 2010 and 2012 reveal various findings. First, fewer than 3% of firms failed to pass their say-on-pay proposals. Second, shareholder dissent on say-on-pay is higher in firms where CEO compensation is high or 'excessive', consistent with agency theory. Third, shareholder dissent is higher in firms with poor performance, measured by stock-market or accounting returns. Fourth, there is less dissent on say-on-pay in firms with better quality boardroom governance (e.g. the presence of a non-CEO lead director or hiring a major compensation consultant). Lastly, difference-in-difference estimates show that the growth in CEO pay is lower in firms that previously attracted high levels of dissent on say-on-pay.

Keywords: Say-on-pay; executive compensation

JEL Classification: G34

Suggested Citation

Conyon, Martin J., Shareholder Dissent on Say-on-Pay and CEO Compensation (March 16, 2016). Available at SSRN: or

Martin J. Conyon (Contact Author)

Bentley University ( email )

175 Forest Street
Waltham, MA 02145
United States

Wharton School, Center for Human Resources ( email )

3600 Locust Walk
Philadelphia, PA 19104-6365
United States

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