Say on Pay
A non-binding shareholder vote on a company's executive compensation package, required by the Dodd-Frank Act.
What is Say on Pay?
Say on pay is an advisory (non-binding) shareholder vote on a company's executive compensation practices, required for US public companies under Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which took effect in 2011. Shareholders vote annually to approve or disapprove executive compensation disclosures as presented in the proxy statement's Compensation Discussion & Analysis section. While the outcome is non-binding, consistent low approval ratings create significant reputational pressure and prompt compensation committee changes. Companies must also hold a separate vote (say-on-frequency) on how often — every one, two, or three years — say-on-pay votes should occur.
Example
In 2023, Walt Disney Company shareholders delivered approximately 52% opposition to the company's executive pay packages at the annual meeting, following an ISS recommendation against approval. The result prompted Disney's compensation committee to reassess CEO Bob Iger's pay structure for fiscal 2024 and engage in extensive shareholder outreach.
Source: Walt Disney Company — 2023 Annual Meeting 8-K Filing