Shareholder Votes and Proxy Advisors: Evidence from Say on Pay

Ertimur, Yonca; Ferri, Fabrizio; Oesch, David

doi:10.2139/ssrn.2019239

Cited by 25 publications

(9 citation statements)

References 35 publications

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“…Cotter et al (2013) referred to the ''say-on-pay'' campaigns as a ''shift in the management-shareholders dynamic'', implying companies that received negative votes would communicate more with shareholders or even change compensation practices. Ertimur et al (2013) identified the role of proxy advisors and demonstrated their major contribution is to process a substantial amount of executive compensation information, thus lowering the costs of institutional investors when make voting decisions.…”

Section: : a Power Shift-''say-on-pay'' Campaignsmentioning

confidence: 99%

“…Armstrong et al (2013) indicated that shareholders' votes have little impact on firms' compensation policies. Ertimur et al (2013) identified the role of proxy advisors and demonstrated their major contribution. Cotter et al (2013) was another paper we identified in the research fronts that investigated the first year of ''say-on-pay'' under the Dodd-Frank Act in the US The paper mentioned that shareholders generally gave support to executive pay packages, but those firms with excessive CEO pay, low operation returns, and negative voting recommendations from proxy advisors experienced greater ''against'' votes than other companies.…”

Section: Shareholder Voting and Shareholder Rightsmentioning

confidence: 99%

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Exploring the research fronts and main paths of literature: a case study of shareholder activism research

Vincent

Liu

2016

Scientometrics

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As a relatively young and vibrant discipline, shareholder activism has evolved to become a critical element of corporate governance research. While both finance and law scholars have revealed strong interest on shareholder activism, the heterogeneity in the research concentration of these two fields makes shareholder activism a fragmented discipline. We believe it would be interesting and insightful to conduct a citation-based analysis through the case study encompassing related articles on this topic published in both finance and law journals. We have adopted main path analysis to map out the evolution and research fronts of shareholder activism spanning over 30 years. The results indicated that shareholder activism research has developed in several stages: discussions on theoretical foundation, explorations on the ''shareholder activism versus firm performance'' correlation, the exceptions to the ''oneshare, one-vote'' rule, the emergence of hedge fund activism research, and the recent ''say-onpay'' campaigns. Edge-betweenness based clustering was used to categorize the citation network into coherent groups, with the most popular themes for the period 2003-2013 including ''pressure and monitoring from institutional investors'', ''shareholder activism in CSR and climate change'', ''say-on-pay movement and board responsiveness'', and ''shareholder voting and shareholder rights''. The trends are also discussed herein. This case study should contribute to future studies in both the practical and academic arenas.

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Section: : a Power Shift-''say-on-pay'' Campaignsmentioning

confidence: 99%

Section: Shareholder Voting and Shareholder Rightsmentioning

confidence: 99%

Exploring the research fronts and main paths of literature: a case study of shareholder activism research

Vincent

Liu

2016

Scientometrics

View full text Add to dashboard Cite

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“…Proxy advisor recommendations are the most important source of information for shareholders when deciding how to vote in shareholder meetings (Choi et al 2010;Ertimur et al 2013). However, recent research suggests that in determining their voting decision, shareholders also take into account various other aspects relevant to the specific context of the vote.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

“…Accordingly, shareholder voting and its determinants have received increasing attention in the literature (Gordon and Pound 1993;Gillan and Starks 2000;Fischer et al 2009;Choi et al 2010). In particular, votes on corporate decisions such as director elections, compensation, and shareholder proposals have been extensively studied (Cai et al 2009;Cunat et al 2012;Ertimur et al 2013). Corporate transactions, however, which are arguably some of the most far-reaching corporate decisions, have been largely neglected by the literature to date.…”

Section: Introductionmentioning

confidence: 99%

“…Recent research suggests that proxy advisor recommendations are the most important source of information for shareholders (Choi et al 2010;Ertimur et al 2013). However, other aspects relevant to the specific context of the vote, such as governance structures, firm and director performance, management entrenchment, ownership structure, and size, have been found to influence shareholder voting decisions (Gordon and Pound 1993;Gillan and Starks 2000;Cai et al 2009;Fischer et al 2009).…”

Section: Introductionmentioning

confidence: 99%

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Shareholder voting and merger returns

Henning

2015

Financ Mark Portf Manag

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Using a sample of 384 shareholder meetings, I investigate whether shareholder votes on mergers and acquisitions in both target and acquirer firms are related to announcement day abnormal returns and whether the voting outcome has implications for the short-and long-run merger performance. I find that shareholder voting dissent is negatively related to both abnormal returns upon merger announcement and recommendations by the Institutional Shareholder Services. The former relationship is stronger for target firms and only borderline significant for acquirer firms. Overall, shareholders seem to take both advisor opinions and market beliefs into account when taking their voting decision. I also find that cumulative abnormal returns on the meeting date are strongly positively related to voting dissent. The observed relationship holds only for mergers with a long negotiation period, suggesting that in these mergers a higher fraction of residual uncertainty is resolved with a "pass" vote. Furthermore, I find that voting dissent is negatively related to long-run abnormal merger performance, suggesting a predictive power of merger votes.

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Determinants of disclosures of alternative pay measures and their role in Say on Pay approval

Hadley

2017

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Purpose The purpose of this paper is to examine the determinants of the increase in firms’ reporting of alternative pay measures in Pay for Performance disclosures and their role in subsequent Say on Pay approval. Design/methodology/approach This study explores the most common types of supplemental compensation disclosures used in Pay for Performance discussions using a hand-collected sample of S&P 500 proxy statements from 2012-2014. The sample compares key characteristics of firms reporting “pocketed” pay, “market-value” pay, and “peer comparison” percentile ranking pay compared to firms that do not use these alternatives. Findings Results suggest that firms use alternative pay measures in their Pay for Performance disclosures for different reasons. While “pocketed” pay reporters show characteristics of opportunistic disclosures and “peer comparison” reporters tend toward informative disclosure, there is often a significant positive impact of disclosing additional compensation information on Say on Pay approval when combating prior poor Say on Pay support. However, the effect seems most significant for peer comparisons, indicating the value of reporting comparative pay. Originality/value This study provides insights into the increasing use of alternative pay measures, and through these measures, identifies an additional mechanism of firms’ responses to Say on Pay votes. In addition, this study highlights the importance of standardized Pay for Performance disclosures to improve informativeness and comparability in financial reporting across firms. Finally, the study provides additional evidence of opportunistic disclosure by firms in order to preserve executive pay.

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Shareholder Votes and Proxy Advisors: Evidence from Say on Pay

Cited by 25 publications

References 35 publications

Exploring the research fronts and main paths of literature: a case study of shareholder activism research

Exploring the research fronts and main paths of literature: a case study of shareholder activism research

Shareholder voting and merger returns

Determinants of disclosures of alternative pay measures and their role in Say on Pay approval

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