Public opinion and executive compensation

Arbeitspapier

We inquire whether public opinion influences executive compensation. During 1992-2008 the negativity of press coverage of CEO pay varied significantly, with stock options being the most discussed pay component. We find that after more negative press coverage of CEO pay firms reduce option grants and increase other compensation including stock awards, overall reducing pay-to-performance sensitivity. The reduction in option pay after increased press negativity is more pronounced when firms and CEOs have stronger reputation concerns. Our within-firm, within-year identification shows the results cannot be explained by annual changes in accounting rules regarding executive compensation, stock market conditions, or pay mean-reversion.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CFR Working Paper ; No. 08-09 [rev.]

Classification and Topics

• Classification: Wirtschaft ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Personnel Economics: Compensation and Compensation Methods and Their Effects ; Compensation Packages; Payment Methods
• Subject: executive compensation ; public opinion ; social norms ; media coverage

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kuhnen, Camelia M. ; Niessen, Alexandra
• Event: Veröffentlichung
• (who): University of Cologne, Centre for Financial Research (CFR)
• (where): Cologne
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/69237