JEL classification: G28 G30 G35 G38 a b s t r a c tWe study the tax regulations in relation to dividends and capital gains over the last two decades for the UK in order to determine whether changes in tax regimes affect corporate payout policy (dividends, share repurchases, or a combination). While we can identify investors' tax-driven preferences for a specific payout channel, we find no evidence of taxinduced clienteles. Firms do indeed not cater to the tax preferences of their shareholders (including individuals, pension funds, corporations). Other factors, such as equity-based compensation received by the CEO and investor sentiment in the form of optimism reduce the dividend payout and increase the use of share repurchases.'But in the real world there remains one overwhelming reason why dividend policy is not irrelevant: tax. The way dividends are taxed can have wide-ranging consequences for how a firm is run. In particular, it can influence whether a firm finances itself primarily through equity or debt, and how it chooses to return profits to its shareholders.' (The Economist, 9th January 2003) 'In Britain Gordon Brown staged an infamous pensions tax "grab" in 1997, which reduced private pension funds' income by around £5 billion (then $8.4 billion) a year by eliminating the tax credit on dividend payments.' (The Economist, 2nd December 2010) 'In America dividends seemed to go out of fashion in the 1990s. A yield of 2% or so appeared trivial when the market was rising by 20% a year. The disrespect for dividends also reflected the belief that, for tax reasons, share repurchases were a better way of returning cash to investors.' (The Economist, 2nd September 2010)

While we find no pay gap for the figure-head (CEO), there is significant pay discrimination for other female top managers who are board members as they earn £1.3 million less over a five-year period. We also show that the gender pay gap is lower for executives in firms with female non-executives. Female executives in 'male' industries face a smaller pay gap. The advice of top remuneration consultants does not reduce the pay gap for executive directors (excluding the CEO). We also find that the pay gap increases when accounting for marriage and parenthood.

While we find no pay gap for the figurehead (CEO), there is significant pay discrimination for other female top managers who are board members as they earn £1.3 million less over a five-year period. We also show that the gender pay gap is lower for executives in firms with female non-executives. Female executives in 'male' industries face a smaller pay gap. The advice of top remuneration consultants does not reduce the pay gap for executive directors (excluding the CEO). We also find that the pay gap increases when accounting for marriage and parenthood.

Manuscript Type Empirical Research Question/Issue This paper investigates whether corporate payout policies (dividends, share repurchases, a combination of dividends and share repurchases, and full earnings retention) are set by CEOs who intend to maximize their personal wealth. Research Findings/Insights For all listed UK companies we study whether the payout channel choice is affected by investor sentiment, taxation, major shareholder ownership, and in particular the CEO's compensation package. The payout choice has an immediate effect on the value of the CEO's stock options and restricted stock, as anticipated dividends drive down the value of his equity‐based pay (if it is not dividend‐protected), and share repurchases have a positive impact on pay. By means of a quantile regression approach and nested logit models, we find that CEOs adopt a payout policy that increases the value of their equity‐based pay. Theoretical/Academic Implications Traditional research shows that corporate payout policies cater to shareholder clienteles who have preferences for specific types of payout induced by e.g. differences in taxation on dividends and capital gains, or market sentiment. We demonstrate that it is a CEO's personal wealth as reflected by his compensation package rather than shareholder preferences that has the strongest impact on the payout policy. Practitioner/Policy Implications This research encourages firms/remuneration consultants to make top management's remuneration packages ‘dividend‐neutral’, in other words to remove the negative impact of the dividends on pay such that the payout and payout channel choice will not be influenced by the CEO's wealth. In addition, this research encourages shareholders to contemplate whether the payout is beneficial for them and to vote on the proposed payout policy at the annual general meetings.

Manuscript Type: EmpiricalResearch Question/Issue: This paper investigates whether corporate payout policies (dividends, share repurchases, a combination of dividends and share repurchases, and full earnings retention) are set by CEOs who intend to maximize their personal wealth. Research Findings/Insights: For all listed UK companies we study whether the payout channel choice is affected by investor sentiment, taxation, major shareholder ownership, and in particular the CEO's compensation package. The payout choice has an immediate effect on the value of the CEO's stock options and restricted stock, as anticipated dividends drive down the value of his equity-based pay (if it is not dividend-protected), and share repurchases have a positive impact on pay. By means of a quantile regression approach and nested logit models, we find that CEOs adopt a payout policy that increases the value of their equity-based pay. Theoretical/Academic Implications: Traditional research shows that corporate payout policies cater to shareholder clienteles who have preferences for specific types of payout induced by e.g. differences in taxation on dividends and capital gains, or market sentiment. We demonstrate that it is a CEO's personal wealth as reflected by his compensation package rather than shareholder preferences that has the strongest impact on the payout policy. Practitioner/Policy Implications: This research encourages firms/remuneration consultants to make top management's remuneration packages 'dividend-neutral', in other words to remove the negative impact of the dividends on pay such that the payout and payout channel choice will not be influenced by the CEO's wealth. In addition, this research encourages shareholders to contemplate whether the payout is beneficial for them and to vote on the proposed payout policy at the annual general meetings.