Gender Diversity and Say‐On‐Pay: Evidence from UK Remuneration Committees

23 Pages Posted: 19 May 2020

See all articles by Nasser Alkalbani

Nasser Alkalbani

University of East Anglia (UEA)

Francesca Cuomo

University of East Anglia (UEA) - Norwich Business School

Chris Mallin

Norwich Business School, University of East Anglia; University of Birmingham - Birmingham Business School

Date Written: September 2019

Abstract

Research question/issue. We examine whether the presence of women on the remuneration committee has an influence on say‐on‐pay voting. Research findings/insights. Based on panel data from the UK's FTSE 350 firms from 2003 to 2015, we find that firms with women on the remuneration committee reduce shareholders' dissent via say‐on‐pay. However, only firms with a critical mass of more than 30% women on this committee are more likely to have less shareholders' dissent via say‐on‐pay (i.e., the presence of 30% women or less on this committee is not sufficient). Theoretical/academic implications. Our results provide empirical evidence that the gender diversity of directors on the remuneration committee plays a significant role in shaping shareholders' dissent via say‐on‐pay in the United Kingdom. Our results also provide empirical support for some of the previous studies that draw on critical mass theory that imply that women are more effective monitors when they make up a critical mass of more than 30%. Practitioner/policy implications. Our results could provide regulators with evidence in favor of improving women's representation on UK remuneration committees. In addition, our results could help shareholders and nomination committee members understand the importance of having women on UK remuneration committees, as they are more likely to avoid suboptimal pay and align directors' remuneration packages more closely with shareholders' expectations. Finally, our results could also attract the attention of main stakeholders and the media, especially given their increasing attention both to gender diversity and say‐on‐pay.

Keywords: Corporate Governance, board committees, compensation committee, ownership mechanisms, shareholder activism, shareholder resolutions

Suggested Citation

Alkalbani, Nasser and Cuomo, Francesca and Mallin, Christine, Gender Diversity and Say‐On‐Pay: Evidence from UK Remuneration Committees (September 2019). Corporate Governance: An International Review, Vol. 27, Issue 5, pp. 378-400, 2019, Available at SSRN: https://ssrn.com/abstract=3593714 or http://dx.doi.org/10.1111/corg.12292

Nasser Alkalbani (Contact Author)

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

Francesca Cuomo

University of East Anglia (UEA) - Norwich Business School ( email )

Norwich
NR4 7TJ
United Kingdom

Christine Mallin

Norwich Business School, University of East Anglia ( email )

Norwich Research Park
Norwich, NR4 7TJ
United Kingdom

University of Birmingham - Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

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