New Research: "Say on Pay Leads to 38% Drop in CEO Comp - WebCPA"
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Say on Pay Leads to 38% Drop in CEO Comp - WebCPA
Say on Pay Leads to 38% Drop in CEO Comp
New York
(July 26, 2010)
Shareholder votes on executive compensation at U.S. firms have
resulted in an average single-year pay drop for CEOs of about $7.3
million or about 38 percent in companies where pay was excessive,
according to a new study to be presented by the American Accounting
Association.
full article at link above
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The head researcher on this study, Fabrizioa Ferri, was an author of one of the prior studies on Say on Pay that is often cited by the US Treasury Department as showing its effective. (The study actually showed mixed results)
I am very wary of this new study. Of approximately 10,000 public companies, less than 100 currently have Say on Pay. Many of those went into the process as a result of tensions with shareholders.
In addition, this new study states (although the headline does not) that companies with "excessive compensation practices" saw a decrease of in CEO pay of 38%. I have not yet done the research, but my guess is that the VAST majority of companies do not fall into this category.
Your thoughts?
The particular decade they're looking at is problematic as well. 1997 through 2007 isn't exactly an uneventful period in which say-on-pay was the only possible explanation for the drop in these particular companies.