CFA Level I · CFA Level I Exam · Equity Jurisdictions, Classes, and the Voting Process
Shareholders of a company are asked to vote on a non-binding resolution approving executive pay. This type of vote is best described as:
This is a say-on-pay vote. It gives shareholders a chance to approve or disapprove executive compensation, and it is often advisory rather than binding. Cumulative voting relates to electing directors, while a squeeze-out relates to forcing out minority shareholders after a takeover.
- Aa say-on-pay voteCorrect
- Ba squeeze-out vote
- Ca cumulative vote
Explanation
Say-on-pay votes let shareholders express approval or disapproval of executive compensation and are often advisory only. A squeeze-out involves buying out minority holders, and cumulative voting concerns director elections.
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