Say on Mobility:Do CEO Outside Opportunities Affect Shareholder Say on Pay?

We investigate whether shareholders take into account CEO outside opportunities when casting their say on pay (SoP) votes. By employing the staggered rejection of the inevitable disclosure doctrine (IDD) by US states as an exogenous shock that increases key talent outflow risk, we find that IDD rejection moderates the well-documented positive relation between CEO pay and dissenting SoP votes. The effect is concentrated in firms with more able managers, higher firm efficiency, better operating performance, and greater uncertainty of a new manager's ability. Our results are the first to highlight talent retention as an important motive for affirmative SoP votes.