Say-on-pay vote.
In plain English
A say-on-pay vote gives shareholders a periodic ballot item on the compensation paid to a company's named executive officers. The Dodd-Frank Act requires public companies to hold it, along with a separate vote on how often it happens. The result is advisory, meaning a rejected package does not have to be undone. Even so, a low approval figure is a public signal, and compensation committees usually respond by changing pay design or explaining themselves in the next proxy statement.
01Why it matters
It is one of the few direct ways an ordinary shareholder registers an opinion on pay, and a weak vote reliably shows up as changes in the following year's package.
02The math, step by step
A package draws 62 percent support when typical approval runs above 90 percent. Nothing is legally reversed, but a result that far below normal usually produces revised metrics or longer vesting the next year.
Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.
03What this is NOT
Say-on-pay does not undo compensation already granted, and the board keeps final authority. Its force is reputational. Shareholders who want binding change have to vote against the compensation committee's directors instead.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice