Say on pay is a term used for a role in corporate law whereby a firm's shareholders have the right to vote on the remuneration of executives.
[2] The effect of ‘say on pay’ measures can be binding or non-binding, depending on regulatory requirements or internal corporate policy as determined by proxy votes.
[4] On the 3rd of March, the Swiss voted by 69.7 per cent to ensure shareholders, pension funds and not banks, entirely control questions of executive pay.
Employee share schemes that directors have must be approved by ordinary resolution under the London Stock Exchange Listing Rule 9.4.1.
Under the UK Corporate Governance Code, with which all listed companies must comply or explain why they do not, a binding vote on approval of long-term incentive plans is recommended.
In 2007, the Chairman of the Financial Services Committee Rep. Barney Frank sponsored legislation that was passed by the House of Representatives, giving shareholders a non-binding vote on executive compensation.
The Emergency Economic Stabilization Act of 2008 (EESA), which established the Troubled Asset Relief Program, required say on pay resolutions at companies with outstanding funds from the TARP.
[9] On February 4, 2009, Treasury Secretary Timothy Geithner stated that companies that have received exceptional financial recovery assistance from the TARP fund would have to subject executive compensation to "Say on Pay" resolutions.
[11] Additionally, the Treasury reconciled its proposals from February 4 with Congressional amendments to the EESA in the Final Interim Rule on TARP Standards for Compensation and Corporate Governance.
In the High-Level Group of Company Law Experts' Final Report in 2002, they stated they would not wish to impose a requirement for voting EU-wide, yet.
The Coalition Government of Germany has recently passed reforming legislation to the Stock Corporation Act to introduce a non-binding say on pay.
[22] Ryan Krause and colleagues argued that "say on pay" offered little information to the board of directors beyond disapproval of CEO compensation not being in line with firm performance.
[23] Another academic study shows that the introduction of "say on pay" in 14 countries, did not increase the market value of shareholder voting rights in the average firm.