Abstract

http://ssrn.com/abstract=1926223
 
 

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Institutional Investor Preferences and Executive Compensation


Joseph A. McCahery


Tilburg University - School of Law; European Banking Center (EBC); European Corporate Governance Institute (ECGI); Duisenberg School of Finance; Tilburg Law and Economics Center (TILEC)

Zacharias Sautner


Frankfurt School of Finance & Management gemeinnützige GmbH

January 5, 2012

Research Handbook on Executive Pay, edited by J. Hill and R. Thomas, Edward Elgar Publishing Ltd
European Banking Center Discussion Paper No. 2012-002
CentER Working Paper Series No. 2012-004

Abstract:     
In this paper, we investigate the attitudes of institutional investors, such as hedge funds, insurance companies, mutual funds and pension funds, towards a key corporate governance mechanism, namely executive compensation. We document the preferences they have about both the level and structure of executive compensation. Our analysis takes a comparative approach as we ask investors to reveal their preferences both for firms in the U.S. and in The Netherlands. Our analysis further sheds light on who should decide on executive pay, thereby contributing to the recent debate on shareholder involvement in executive pay. Finally, we examine their views on the most important and largest component of executive pay, executive stock options, and investigate what preferences they have when it comes to the design of such options.

Number of Pages in PDF File: 23

Keywords: Executive Compensation, Institutional Investors, Corporate Governance

JEL Classification: G34

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Date posted: September 13, 2011 ; Last revised: August 2, 2012

Suggested Citation

McCahery, Joseph A. and Sautner, Zacharias, Institutional Investor Preferences and Executive Compensation (January 5, 2012). Research Handbook on Executive Pay, edited by J. Hill and R. Thomas, Edward Elgar Publishing Ltd; European Banking Center Discussion Paper No. 2012-002; CentER Working Paper Series No. 2012-004. Available at SSRN: http://ssrn.com/abstract=1926223 or http://dx.doi.org/10.2139/ssrn.1926223

Contact Information

Joseph A. McCahery (Contact Author)
Tilburg University - School of Law; European Banking Center (EBC) ( email )
Warandelaan 2
Tilburg, 5000 LE
Netherlands
+31-(0)13-466-2306 (Phone)
+31-(0)13-466-2323 (Fax)
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Duisenberg School of Finance ( email )
Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands
Tilburg Law and Economics Center (TILEC)
Warandelaan 2
Tilburg, 5000 LE
Netherlands
Zacharias Sautner
Frankfurt School of Finance & Management gemeinnützige GmbH ( email )
Sonnemannstraße 9-11
Frankfurt am Main, 60314
Germany
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