Say-on-Pay
Say-on-pay is the advisory shareholder vote on executive compensation, held at least every three years at US public companies.
Advisory, but consequential
Under Dodd-Frank, shareholders vote to approve the proxy's executive compensation in a non-binding resolution — annually at most large companies. Boards rarely ignore a failed vote, and a second consecutive failure often triggers pay-practice changes.
Say-on-pay support is also the payout condition for some PSU plans (a 'say-on-pay modifier' adjusts the multiplier based on the vote outcome).
Frequently asked
Is the company bound by the vote?
No — it is advisory. But a majority-against result carries strong reputational force and proxy advisors campaign around it.
Related terms
Next term: Net Income in the Pay-vs-Performance Table (14 of 15)