Multinational Finance Journal

Say-on-Pay: Is Anybody Listening?

Multinational Finance Journal, 2016, vol. 20, no. 4, pp. 273–322
https://doi.org/10.17578/20-4-1 – an open-access journal article

Stephani A. Mason, DePaul University, USA

Ann F. Medinets, Rutgers Business School, USA

Dan Palmon, Rutgers Business School, USA

 

Abstract:

There is an ongoing debate about whether executives receive excessive compensation, and if so, how to control it. Several countries have instituted say-on-pay rules (shareholders’ right to vote on executive compensation) to reduce excessive compensation. However, determining the effectiveness of say-on-pay is difficult because its tenets vary by country due to political, institutional, cultural, economic, and social factors. Policy issues like say-on-pay are complex, ill-structured problems without definitive assumptions, theories, or solutions. Existing say-on-pay research is inconclusive, since some studies find no change in CEO compensation around its adoption, whereas other studies show that say-on-pay lowers CEO pay or changes its composition. This paper chronicles the history of say-on-pay, compares its implementation by groups (e.g. shareholders-initiated versus legislated and binding versus advisory), discusses the complexities of using say-on-pay to address excessive executive compensation, and recommends future research directions.

 

Keywords:

Executive compensation; say-on-pay; compensation regulation; shareholder activism; shareholder proposals; corporate governance

 

Citation (APA):

Mason, S. A., Medinets, A. F., & Palmon, D. (2016). Say-on-pay: Is anybody listening? Multinational Finance Journal, 20(4), 273–322.

Citation (Harvard):