An investigation of corporate directors' responses to CEO pay ratio disclosures and say-on-pay votes

Carolyn Strand Norman, Anna M. Rose, Jacob M. Rose, Ikseon Suh

Research output: Contribution to journalArticleResearchpeer-review

2 Citations (Scopus)


The purpose of this study is to shed light on the effects of the CEO pay ratio and say-on-pay votes on directors' concerns about CEO pay equity. Investigation of the pay ratio disclosure rule offers opportunities to gain insights into whether equity perceptions associated with mandated pay ratio disclosure have significant effects on remuneration decisions in organizations. We conduct an online experiment with practicing corporate directors to examine the effects of CEO pay ratio disclosures and say-on-pay (SOP) votes on director decisions. Results indicate that CEO pay ratio disclosures significantly influence directors' decisions regarding executive compensation, leading directors to be less willing to increase CEO pay when the pay ratio is above the industry average pay ratio. Results also demonstrate that say-on-pay votes only influence directors' compensation decisions when the CEO pay ratio is above the industry average. Directors in firms with pay ratios that are above the industry average are less willing to increase CEO pay when they anticipate shareholder votes against a CEO pay increase than when they anticipate positive SOP voting outcomes. Directors in firms with CEO pay ratios that are below the industry average, however, are willing to increase CEO pay regardless of SOP voting outcomes.

Original languageEnglish
Pages (from-to)455-474
Number of pages20
JournalHuman Resource Management
Issue number3
Publication statusPublished - May 2021


  • board of directors
  • CEO pay ratio
  • equity theory
  • say-on-pay votes

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