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 Review 124:1 63–71

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

Wiley Period icals, Inc., 350 Main Street , Malden, MA 02148, USA , and 9600 Ga rsington

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

Say-On-Pay Voting: A Five-Year

Retrospective

THOMAS A. HEMPHILL

ABSTR ACT

The Dodd-Frank Wall St reet Reform and Consumer

Protection Act, signed into law by President Obama i n

July 2010, included two significa nt 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 advisor y, or nonbinding, vote at least once every

three years on t he compensation packages of the most

highly compensated executives. T he actual data for the

first five year s of say-on-pay voting indicates one intrac-

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

not verified what many sha reholder activists origina lly

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

lar opinions about business executives bein g signific antly

overpaid for their managerial perfor mances. Durin g its

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

indicate that shareholders are over whelmingly sat isfied

with executive compensation packages, as a 92 percent

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

exceeding 70 percent) among companies l isted in the

Russell 3000 Index attests.

Thomas A. Hemph ill is David M. F rench Profess or of Strategy, Innov ation and Publ ic

Policy, School of Mana gement, Universit y of Michigan -Flint, Fli nt, MI 48502, U SA.

E-mail: thom ashe@umflint.edu.