This paper examines shareholder disapproval of CEO compensation as expressed through their advisory vote on executive compensation (say-on-pay) as required by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Using a sample of 884 votes by S&P 500 firms in 2011 and 2012, I find that higher CEO salary, a weak link between pay and performance, and higher dilution from stock option grants are associated with lower say-on-pay approval. In addition, I find evidence that shareholders are sophisticated in their examination of CEO compensation by voting against excess compensation over what is deserved due to performance and other determining factors.

This study investigates how the adoption of say-on-pay (SoP) regulation impacts the propensity and profitability of merger and acquisitions (M&A) activities with a sample of S&P 1500 firms (2005 – 2016). We examine both (a) macro-economic effect induced by the adoption of S&P regulation in 2011, impacting all firms across the board, and (b) firm-level effect due to variation in SoP voting approval percentage in different firms. We propose and examine two relevant hypotheses: (i) ‘SoP governance’ hypothesis – to explain the impact of SoP rule adoption, and (ii) ‘reliable CEO’ hypothesis – to explain the impact of SoP voting approval percentage. ‘SoP governance’ hypothesis predicts that in the post-SoP period, CEOs will be more cautious in pursuing M&A deals – which have a high risk of failure. This should lead to a lower probability of acquisition and better acquisition performance. On the other hand, ‘reliable CEO’ hypothesis proposes that CEOs with higher SoP voting approval percentage, enjoy more shareholder confidence and are encouraged to take risky ventures to increase shareholders wealth. This should lead to a higher probability of acquisition, with better acquisition performance. Our results find partial support for ‘SoP governance’ hypothesis – that SoP rule adoption is associated with a lower probability of acquisition but does not have any significant association with acquisition performance. While examining the effect of SoP voting approval percentage, we further find support for ‘reliable CEO’ hypothesis. Our results show that SoP voting approval percentage has a significant and positive association with acquisition probability and acquisition performance. Finally, we find that SoP voting results do not have any significant moderating effect on the relationship between (i) CEO incentive pay and M&A decisions, and (ii) CEO pay slice and M&A decisions.

This study examines the effectiveness of Say on Pay (SoP) regulation as a corporate governance mechanism in the context of M&A deals. Using a large sample of U.S. firms over the 2005-2017 period, this study finds that, in the post-SoP period, overall CEO pay growth rate declines and CEO pay to acquisition performance sensitivity improves following M&A activities. This supports ‘SoP governance’ hypothesis, which proposes that SoP regulation will restrict CEOs self-fulfilling behaviour. In a macro-economic set-up, the introduction of SoP regulation was intended to discipline top managers by giving shareholders an opportunity to express their opinion on CEO compensation. It was therefore expected that, in the post SoP-era, CEOs will experience a lower growth in their pay package following M&A deals. On the other hand, the relation between SOP voting approval rates and CEO compensation following M&A activities is unidirectional. Irrespective of the performance of M&A deals, it is observed that CEOs with higher shareholder voting approval experience a significant positive change in their compensation level after an M&A deal. We term this as a ‘reliable CEO’ hypothesis. According to the ‘reliable CEO hypothesis, a very high voting percentage may legitimize CEOs action and embolden CEOs to carry out more risky ventures such as M&As. Since there is an established relation between risk and return, shareholders would like CEOs to take appropriate risks to increase firm value. A reliable CEO, who enjoys a high degree of shareholders’ support, should not be penalized for taking more risky ventures that are intended to increase shareholders’ wealth. Our results confirm this viewpoint.

The Say on Pay vote, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by Barack Obama in July 2010, is a non-binding vote that either approves or disapproves of the compensation given to Named Executive Officers. As of June 21, 2012, there have been 103 companies that have failed to reach 50% approval in this vote. For this paper I analyze the 103 companies over event windows of two, four, and ten days around the date of the failure to test for statistically significant abnormal stock market returns. None of the average cumulative abnormal returns for the three event windows are significant at any level, and I find no evidence that failing the Say on Pay vote corresponds to an increase or decrease in stock market returns.

The PhD thesis deals with the issue of remuneration of executive bodies' members and other executives of joint stock companies in the Czech Republic and on the international level. This issue is a key area of corporate governance and constitutes an ever current and debated topic. The main research intent of this thesis is an analysis of the development and current shape of regulation in the area of executive remuneration and a related assessment of the regulation` influence on the practice in this area in joint stock companies in the Czech Republic and internationally. Attention is focused on both private and public (listed) companies. The thesis presents the results of the doctrinal and normative research led within the framework of the specific research questions set by the author within the defined research intent. The thesis focuses in detail especially on the question of effectiveness of the post-crisis regulation of remuneration on the global scale, on the interpretation of the regulation of remuneration of executive bodies' members in joint stock companies in the Czech Business Corporations Act and on the proper future shape of Czech rules of corporate governance for listed joint stock companies.