Shareholder activism and CEO pay

Yonca Ertimur, Fabrizio Ferri, Volkan Muslu

Research output: Contribution to journalArticle

120 Citations (Scopus)

Abstract

We study 134 vote-no campaigns and 1,198 shareholder proposals related to executive pay between 1997 and 2007. Union pension funds sponsor most of these initiatives, yet their targeting criteria do not appear to reflect labor-related motives. Shareholders favor proposals related to the pay-setting process (e.g., subject severance pay to shareholder approval) over proposals that micromanage pay level or structure. While activists target firms with high CEO pay (whether excessive or not), voting support is higher only at firms with excess CEO pay. Firms with excess CEO pay targeted by vote-no campaigns experience a significant reduction in CEO pay ($7.3 million). Our findings contribute to the debate on "say on pay" and other reforms empowering shareholders.

Original languageEnglish (US)
Pages (from-to)535-592
Number of pages58
JournalReview of Financial Studies
Volume24
Issue number2
DOIs
StatePublished - Feb 1 2011
Externally publishedYes

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CEO pay
Shareholders
Shareholder activism
Vote
Labor
Severance pay
Targeting
Executive pay
Pension funds
Sponsor
Voting

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Shareholder activism and CEO pay. / Ertimur, Yonca; Ferri, Fabrizio; Muslu, Volkan.

In: Review of Financial Studies, Vol. 24, No. 2, 01.02.2011, p. 535-592.

Research output: Contribution to journalArticle

Ertimur, Yonca ; Ferri, Fabrizio ; Muslu, Volkan. / Shareholder activism and CEO pay. In: Review of Financial Studies. 2011 ; Vol. 24, No. 2. pp. 535-592.
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