Even non-binding shareholder votes on CEO pay improve firm performance and shareholder value.
In the aftermath of the financial crisis, legislators in some countries moved to address corporate excesses by making shareholder votes on CEO pay mandatory. The United Kingdom mandated a non-binding vote on director pay at annual meetings and, since 2011, a similar measure has been mandatory for all US-listed firms.
Earlier this year, Switzerland voted in a referendum to give shareholders a binding say on executive pay, along with a requirement that directors be re-elected annually. They also voted to put an end to generous payments to executives joining or leaving firms (golden handshakes and golden parachutes).
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