Importing pay practices: how US Directors on UK boards increase CEO compensation and say-on-pay dissent

Purpose This study aims to investigate whether the presence of US directors on remuneration committees in UK firms affects chief executive officer (CEO) compensation and shareholder dissent in say-on-pay voting. The focus is on both the presence and the critical mass of US directors, who represent the largest group of foreign members on UK boards. Design/methodology/approach Using a panel data set of non-financial Financial Times Stock Exchange 350 firms from 2003 to 2015, the analysis employs multivariate regression techniques to test the association between US directors on remuneration committees, CEO pay levels and shareholder voting outcomes. Findings The results indicate that firms with US directors on their remuneration committees award significantly higher CEO compensation and face greater shareholder dissent in say-on-pay votes. The effect is especially pronounced when two or more US directors are present, supporting predictions from critical mass theory. Research limitations/implications The study focuses on a specific institutional and temporal context, which may limit generalisability to other markets or governance systems. Nonetheless, the findings carry practical implications for board composition strategies, especially in multinational firms, where cultural alignment and engagement levels of foreign directors should be carefully considered to avoid unintended governance outcomes. Originality/value The study extends the literature on executive pay and corporate governance by focusing on the role of nationality diversity in remuneration committees. It provides novel UK evidence on how the cultural and institutional background of foreign directors can shape both executive pay outcomes and shareholder responses, offering insights for boards, investors and policymakers.