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Abstract
Through the lens of agency and social norms theories, this study investigates the extent to which say-on-pay (SOP) votes and other corporate governance mechanisms are able to predict CEO-to-worker pay gap. Based on a large sample of companies listed on the FTSE 350 index covering a significant post-financial crisis period (2010-2015), the results, after controlling for endogeneity problems, show no relationship between SOP votes and CEO-to-worker pay gap. We document that CEO turnover and CEO tenure are the major reasons the gap existed over time. Our study did not find any link between either board gender diversity or the proportion of board independent directors and the CEO- to-worker pay gap. Also, we provide further evidence that CEO-to-worker pay ratio increases with firm size.
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