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‘SAY ON PAY’ REGULATION AND CHIEF EXECUTIVE OFFICER PAY: EVIDENCE FROM AUSTRALIADownload This Article
Mahdi Faghani, Reza Monem, Chew Ng
We investigate the consequences of Australia’s ‘say on pay’ regulation on the chief executive officer (CEO) compensation using recent data. We find that, for the ‘first-strike’ firms that avoided a ‘second strike’ (the treatment firms), a reduction in CEO total remuneration is positively associated with a lower level of shareholder dissent votes on the following remuneration report. We also find that, unlike control firms, the treatment firms increased the proportion of CEO’s performance-based pay in the year following the ‘first strike’ and such an increase is negatively related to a change in shareholders’ dissent level. Further, detailed descriptive analysis suggests that the ‘first-strike’ firms made relatively more frequent and larger pay reductions by reducing the level of pay in one or more components of the CEO pay.
Keywords: ‘Say on Pay’, CEO Pay; ‘Two-strikes’ Rule, Performance-based Pay, Shareholder Dissent
How to cite this paper: Faghani, M., Monem, R, & Ng, C. (2015). ‘Say on pay’ regulation and chief executive officer pay: Evidence from Australia. Corporate Ownership & Control, 12(3), 28-39. http://doi.org/10.22495/cocv12i3p3