Say‐On‐Pay Voting: A Five‐Year Retrospective

• Author: Thomas A. Hemphill
• DOI: http://doi.org/10.1111/basr.12163
• Published date: 01 March 2019
• Date: 01 March 2019

Business and Society Review124:1 63–71

© 2019 W. Michael Hoffman Center for Busi ness Ethics at Bentley Univer sity. Published by

Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington

Road, Oxford OX4 2DQ, U K. DOI: 10.1111/basr.12163

Say-On-Pay Voting: A Five-Year

Retrospective

THOMAS A. HEMPHILL

ABSTRACT

The Dodd-Frank Wall Street Reform and Consumer

Protection Act, signed into law by President Obama in

July 2010, included two significant corporate governance

mandates: “say-on-pay” shareholder voting and the fre-

quency of such votes among all publicly traded compa-

nies. The say-on-pay rule requires publicly traded

companies subject to proxy rules to offer their sharehold-

ers an advisory, or nonbinding, vote at least once every

three years on the compensation packages of the most

highly compensated executives. The actual data for the

first five years of say-on-pay voting indicates one intrac-

table conclusion: that shareholder say-on-pay voting has

not verified what many shareholder activists originally

believed, i.e., that the majority of shareholders held simi-

lar opinions about business executives bein g signific antly

overpaid for their managerial performances. During its

first five years in effect, the results of say-on-pay voting

indicate that shareholders are overwhelmingly satisfied

with executive compensation packages, as a 92 percent

average shareholder say-on-pay approval result (i.e.,

exceeding 70 percent) among companies listed in the

Russell 3000 Index attests.

Thomas A. Hemphill is David M. French Professor of Strategy, Innovation and Public

Policy, School of Management, University of Michigan-Flint, Flint, MI 48502, USA.

E-mail: thom ashe@umflint.edu.