Shareholder Activism and CEO Pay

Ertimur, Yonca; Muslu, Volkan; Ferri, Fabrizio

doi:10.2139/ssrn.1456996

Cited by 143 publications

(251 citation statements)

References 31 publications

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“…Past research has shown that shareholder proposals on traditional corporate governance issues, such as executive compensation, takeover provisions and board of directors' composition, have in recent years been effective at changing corporate governance, although their impact on firm valuation is unclear (Ertimur, Ferri and Muslu 2011). These proposals, although not binding, increasingly receive majority support by voting investors and as a result proxy access is being considered an important corporate governance mechanism.…”

Section: Introductionmentioning

confidence: 99%

Shareholder Activism on Sustainability Issues

Grewal

Serafeim²,

Yoon³

2016

SSRN Journal

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Shareholder activism on sustainability issues has become increasingly prevalent over the years, with the number of proposals filed doubling from 1999 to 2013. We use recent innovations in accounting standard setting to classify 2,665 shareholder proposals that address environmental, social and governance (ESG) issues as financially material or immaterial, and we analyze how proposals on material versus immaterial issues affect firms' subsequent ESG performance and market valuation. We find that 58 percent of the shareholder proposals in our sample are filed on immaterial issues. We document that filing shareholder proposals is effective at improving the performance of the company on the focal ESG issue, even though such proposals nearly never received majority support. Improvements occur across both material and immaterial issues. Proposals on immaterial issues are associated with subsequent declines in firm valuation while proposals on material issues are associated with subsequent increases in firm value. We show that companies increase performance on immaterial issues because of agency problems, low awareness of the materiality of ESG issues, and attempts to divert attention from poor performance on material issues.

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Section: Introductionmentioning

confidence: 99%

Shareholder Activism on Sustainability Issues

Grewal

Serafeim²,

Yoon³

2016

SSRN Journal

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“…Shareholders are then able to vote on the remuneration report at the AGM. Votes against the resolution to adopt the remuneration report have generally been called 'no votes' in the Australian media, however terminology in the literature includes 'dissenting votes' (Bugeja, Rosa, Shan, Walter & Yermack, 2016;Clarkson, Walker & Nicholls, 2011), 'rejection votes' (Kimbro & Xu, 2016), 'dissatisfaction votes' (Alissa, 2015) and 'against' votes (Ertimur, Ferri & Muslu, 2010). If more than 25% of the votes cast at the meeting are negative and therefore do not support the resolution to adopt the remuneration report, this is classified as a 'strike'.…”

Section: The 'Two-strikes Rule'mentioning

confidence: 99%

“…Several international studies (Conyon, Peck, Read & Sadler 2000;Ertimur et al, 2010) find evidence that excess CEO remuneration results in significant shareholder dissent. In contrast, Grosse, Kean and Scott (2015) find no support that excess pay is associated with higher shareholder dissent in the Australian setting.…”

Section: Determinants Of Level Of Executive Remunerationmentioning

confidence: 99%

“…The relation between the firm's overall disclosure policy choices and the structure of CEO remuneration has been extensively examined in prior literature (Bugeja et al, 2016;Bugeja et al, 2012;Clarkson et al, 2011;Correa & Lel, 2016;Ertimur et al, 2010). However, the direct relationship between CEO pay and the disclosure about that pay has received limited attention.…”

Section: Grow Itmentioning

confidence: 99%

“…Research by Ertimur et al (2010), Ferri and Maber (2013) and Alissa (2015) find that boards appear to respond to shareholder dissatisfaction, although not in systematic ways. By introducing an enforcement mechanism to the accountability framework, the intent of the PC Inquiry was to improve transparency.…”

mentioning

confidence: 99%

See 2 more Smart Citations

Executive Remuneration: Achieving Accountability through Disclosure

Beaumont¹

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Institutional Investor Activism

Guercio

Tran

2012

Socially Responsible Finance and Investing

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Institutional investors are frequent activist shareholders on corporate governance issues, and have been for the last 25 years. A large literature of academic research has examined whether this activity is effective in influencing target firms and enhancing the performance of both target firms and activists' portfolios. The importance of this question stems from the role of institutional investors as large and influential investors in the capital markets and as financial fiduciaries who are entrusted with the assets of millions of clients and beneficiaries. This chapter examines the many parallels between the issues that institutions face today in incorporating environmental, social, and governance (ESG) criteria into their investment and activism programs, and the issues arising twenty five years ago in the context of corporate governance. In short, socially responsible activism appears to be at the early stages of gaining momentum and legitimacy among mainstream institutional investors, with a steady stream of academic research likely to follow.

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Shareholder Activism and CEO Pay

Cited by 143 publications

References 31 publications

Shareholder Activism on Sustainability Issues

Shareholder Activism on Sustainability Issues

Executive Remuneration: Achieving Accountability through Disclosure

Institutional Investor Activism

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