Fabrizio Ferri

“Say on Pay”

Editors: Jennifer Hill and Randall Thomas


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On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (hereafter Dodd-Frank Act). One provision of the Act mandates that, beginning with annual meetings on or after January 21, 2011, US publicly traded firms allow shareholders a nonbinding vote on executive pay, known as "say on pay" (hereafter SOP). The purpose of this chapter is to present key insights from the academic research on the economic consequences of SOP. The chapter is organized around five parts. Section I provides a brief history of SOP, highlighting its role in the broader context of a gradual shift toward greater shareholder empowerment. The rich set of legislative events accompanying the adoption of SOP in many countries has provided fertile ground for empirical studies. Section II and Section III review the evidence in such studies, focusing on the effect of SOP, respectively, on executive pay and firm value, followed by some concluding remarks in Section IV.

Source: Research Handbook on Shareholder Power
Exact Citation:
Ferri, Fabrizio. "Say on Pay." In Research Handbook on Shareholder Power. Ed. Jennifer Hill and Randall Thomas. Northampton: Edward Elgar (forthcoming).
Place: Northampton
Date: 2014