The Value of Say on Pay

55 Pages Posted: 21 Feb 2019 Last revised: 14 Oct 2020

See all articles by Axel H. Kind

Axel H. Kind

University of Konstanz

Marco Poltera

University of Basel

Johannes Zaia

University of Konstanz

Date Written: October 14, 2020

Abstract

We measure the impact of "say on pay" (SoP) - mandatory shareholder votes on top management
compensation - on the market value of voting rights. By exploiting the
staggered introduction of SoP across 14 economies, we show that SoP does not automatically
increase the value of shareholder voting rights. While stricter binding SoP
reforms increase voting values, looser advisory SoP laws decrease them. Firms that do
not pay their CEOs excessively experience the largest decreases in voting values. Voting
values also reflect a country's level of investor protection, past dissent in SoP ballots,
and dynamically adjust to changes in managerial compensation.

Keywords: Say on Pay, Corporate Voting Rights, Corporate Governance, Option Pricing

JEL Classification: G13, G32, G34

Suggested Citation

Kind, Axel H. and Poltera, Marco and Zaia, Johannes, The Value of Say on Pay (October 14, 2020). Available at SSRN: https://ssrn.com/abstract=3337192 or http://dx.doi.org/10.2139/ssrn.3337192

Axel H. Kind

University of Konstanz

Universitätsstraße 10
Konstanz, D-78457
Germany

Marco Poltera

University of Basel ( email )

WWZ, Corporate Finance Division
Peter Merian-Weg 6
Basel, 4002
Switzerland

Johannes Zaia (Contact Author)

University of Konstanz ( email )

Fach D-144
Universitätsstraße 10
Konstanz, D-78457
Germany

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