Financial Characteristics; Corporate Governance; Executive Compensation; Say on Pay.


The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was passed as a response to the late-2000s recession.  A shareholder opt-in executive pay vote was introduced as a solution to the managerial power problem.  We examine the results of this recommended solution and prove its viability. We find that there is a stronger association between high CEO pay and low say-on-pay vote support for firms with negative financial performance. We also find the market-to-book ratio is significantly lower for companies that failed say-on-pay votes. Furthermore, regulated industries such as financial services are more likely to receive unfavourable say-on-pay votes. We document an increase in the sensitivity of CEO pay to poor performance. Overall, these finds are consistent with calls for less “rewards for failure” that led to the Dodd-Frank Wall Street Reform and Consumer Protection Act.  

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