Greed, Accountability and Say on Pay
Chapter 8: Shareholder voting
When introduced in the UK in 2002, say on pay was seen as a way to improve accountability. Voting was a public message that behind- the- scenes engagement had failed to resolve diff erences of opinion on the most appropriate remuneration practices for the company. Such a diff erence of opinion existed in 2003 in relation to ‘rewards for failure’: shareholders used the fi rst year of the vote to bring about change to termination provisions within contracts.1 The Australian experience over the fi rst three years of say on pay (2005– 07) was very diff erent. Figure 8.1 compares the trajectories of the ‘outrage’ expressed via advisory vote over the fi rst three years of say on pay for the FTSE 100 sample (2003–05) and the S & P/ASX 200 sample (2005–07). We can see that the median level of outrage against FTSE 100 remuneration reports calmed down within three years, whereas the S & P/ASX 200 trajectory is fl atter. However, this is only part of the picture. Figure 8.2 shows that the highest vote against the remuneration report increased over these first three years in Australia, whereas it decreased in the UK over the period from 2003 to 2005.
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