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 | |
| State | Published - Feb 1 2011 |
| Externally published | Yes |
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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 journal › Article
}
TY - JOUR
T1 - Shareholder activism and CEO pay
AU - Ertimur, Yonca
AU - Ferri, Fabrizio
AU - Muslu, Volkan
PY - 2011/2/1
Y1 - 2011/2/1
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 -