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Boards' Response to Shareholders' Dissatisfaction: The Case of Shareholders' Say on Pay in the UK

Abstract : In the United Kingdom, a recently adopted regulation provides shareholders the opportunity to cast non-binding (advisory) votes on firms' compensation reports during annual meetings (i.e., ‘Say-on-Pay'). This study examines how the regulation affected the behavior of shareholders and boards. I find evidence that shareholders use the vote to convey their dissatisfaction with excessive executive compensation practices. In addition, I find evidence that boards respond to shareholders' dissatisfaction by: (1) reducing the excessiveness of CEO compensation for firms whose CEOs have above average excess compensation; or (2) forcing the CEO out of office. These findings provide evidence of ‘Say-on-Pay' regulation playing a role in firms' corporate governance.
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https://hal-hec.archives-ouvertes.fr/hal-00511789
Contributor : Antoine Haldemann <>
Submitted on : Thursday, August 26, 2010 - 10:58:06 AM
Last modification on : Thursday, January 11, 2018 - 6:19:31 AM

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  • HAL Id : hal-00511789, version 1

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Walid Alissa. Boards' Response to Shareholders' Dissatisfaction: The Case of Shareholders' Say on Pay in the UK. 2010. ⟨hal-00511789⟩

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