HEC Research Papers Series,
HEC Paris

Abstract: We study the standard-setting role of proxy advisors when their preferences diverge from regulatory mandates and shareholders' choices. The say-on-pay (SOP) regulation in 2011 allowed U.S. firms to adopt non-annual voting schedules, whereas proxy advisors strongly preferred annual voting. We show that they leverage negative recommendations in compensation committee member elections (CMEs) as an alternative channel for expressing compensation-related concerns in non-SOP years. Among firms that hold triennial SOP votes, negative recommendations in CMEs are significantly more frequent during non-SOP years. Moreover, proxy advisors promote their standards even more strongly in firms where their preferences are less aligned with the voting choices of shareholders, highlighting their standard-setting role even when unpopular.

Keywords: Regulations; Corporate Governance; Proxy Advisors; Say-On-Pay; Executive Compensation; Director Elections

JEL-codes: D43; D82; G34; L15

70 pages, September 18, 2026

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