Shareholder activism and CEO pay

Yonca Ertimur; Fabrizio Ferri; Volkan Muslu

doi:10.1093/rfs/hhq113

Shareholder activism and CEO pay

Yonca Ertimur, Fabrizio Ferri, Volkan Muslu

Research output: Contribution to journal › Article › peer-review

164 Scopus citations

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 language	English (US)
Pages (from-to)	535-592
Number of pages	58
Journal	Review of Financial Studies
Volume	24
Issue number	2
DOIs	https://doi.org/10.1093/rfs/hhq113
State	Published - Feb 2011
Externally published	Yes

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics

Access to Document

10.1093/rfs/hhq113

Cite this

@article{a1bec014f43b48bd83530a813d33001b,

title = "Shareholder activism and CEO pay",

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.",

author = "Yonca Ertimur and Fabrizio Ferri and Volkan Muslu",

year = "2011",

month = feb,

doi = "10.1093/rfs/hhq113",

language = "English (US)",

volume = "24",

pages = "535--592",

journal = "Review of Financial Studies",

issn = "0893-9454",

publisher = "Oxford University Press",

number = "2",

}

TY - JOUR

T1 - Shareholder activism and CEO pay

AU - Ertimur, Yonca

AU - Ferri, Fabrizio

AU - Muslu, Volkan

PY - 2011/2

Y1 - 2011/2

N2 - 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.

AB - 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.

UR - http://www.scopus.com/inward/record.url?scp=79251524954&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=79251524954&partnerID=8YFLogxK

U2 - 10.1093/rfs/hhq113

DO - 10.1093/rfs/hhq113

M3 - Article

AN - SCOPUS:79251524954

VL - 24

SP - 535

EP - 592

JO - Review of Financial Studies

JF - Review of Financial Studies

SN - 0893-9454

IS - 2

ER -

Shareholder activism and CEO pay

Abstract

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Cite this