Title

Say on Pay : Aligning shareholder and Management Incentives

Department

Accounting

Publication Year

2014

Abstract

This research has implications for CEOs and board members. The findings suggest that voting results are not static: they can change from one year to the next; a company can lose or gain support their compensation practices. However due to Say On Pay's non-binding nature, companies do not need to make any changes following a failed Say on Pay vote. Companies that show responsiveness to a failed Say on Pay vote by making some of the requested changes appear to fare much better in the vote the following year. With the knowledge of which factors have a strong impact on the Say on Pay vote, the Board of Directors of public companies are better equipped to create compensation packages that shareholders will support. Additionally, some CEO's can point to high passing rates on their company's Say on Pay vote when they negotiate a new deal.

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