Shareholder say on pay and CEO compensation: three strikes and the board is out |
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| Authors: | Matthew Grosse Stephen Kean Tom Scott |
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| Institution: | 1. Accounting Discipline Group, University of Technology Sydney, NSW, Australia;2. Graduate School of Management, University of Auckland, Auckland, New Zealand |
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| Abstract: | From 2011 in Australia, if over 25% of shareholders vote against a non‐binding remuneration resolution, firms are awarded a ‘strike’. We examine 237 firms that receive a strike relative to matched firms, and find no association with any measure of CEO pay. However, we do find that strike firms have higher book‐to‐market and leverage ratios, suggesting that the remuneration vote is not used to target excessive pay. We also find that firms respond to a strike by decreasing the discretionary bonus component of CEO pay by 57.10% more than non‐strike firms and increasing their remuneration disclosure by 10.95%. |
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| Keywords: | Executive compensation Shareholder resolutions Say on pay Remuneration disclosure |
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