Equity-based incentives and shareholder say-on-pay

Denton Collins, Blair B. Marquardt, Xu Niu

Research output: Contribution to journalArticlepeer-review

12 Scopus citations


We study the relationship between CEO pay-performance sensitivity, pay-risk sensitivity, and shareholder voting outcomes as part of the “say-on-pay” provision of the 2010 US Dodd-Frank Act. Consistent with our hypothesis, we provide evidence that shareholders tend to approve of compensation packages that are more sensitive to changes in stock price (pay-performance sensitivity). Our findings are consistent with theoretical predictions that outside owners approve of equity incentives as a means of aligning managers' interests with those of shareholders. We also document that future changes to equity-based incentives are related to voting outcomes and that shareholders incorporate CFO incentives into their votes. Collectively, these results provide evidence of the importance of equity-based incentives from the perspective of those most concerned with firm value and of the effectiveness of say-on-pay as a governance mechanism.

Original languageEnglish
Pages (from-to)739-761
Number of pages23
JournalJournal of Business Finance and Accounting
Issue number5-6
StatePublished - May 1 2019


  • executive compensation
  • pay-performance sensitivity
  • pay-risk sensitivity
  • shareholder voting


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