Shareholder say on pay and CEO compensation: three strikes and the board is out

摘要

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%.