Say-on-Pay
Also known as: SOP vote
DEFINITION
Under Section 951 of the Dodd-Frank Act, public companies must hold a non-binding shareholder vote on executive compensation at least every 3 years (most do annually). The vote is advisory — the board is not legally required to follow it — but a failed Say-on-Pay vote is a meaningful governance signal and often triggers board engagement with major shareholders.
WHY IT MATTERS FOR RETAIL INVESTORS
A Say-on-Pay vote below 70% support is unusual and worth noticing; below 50% is a serious rebuke that has historically led to compensation changes the following year. Tracking Say-on-Pay results across a sector reveals which boards are being challenged by ISS and Glass Lewis recommendations. The vote rarely directly moves the stock but is a real input on governance quality.
OFFICIAL SEC SOURCE
https://www.sec.gov/rules/final/2011/33-9178.pdf ↗RELATED TERMS
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