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

Publisher:
Wiley: 24 months
Publication Type:
Journal Article
Citation:
Accounting and Finance, 2017, Forthcoming
Issue Date:
2017
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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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