Does Shareholder Scrutiny Affect Executive Compensation?

56 Pages Posted: 24 Nov 2013 Last revised: 5 Dec 2018

Date Written: December 3, 2018


We study whether shareholder scrutiny affects CEO pay. Our identification strategy exploits the fact that recent "say-on-pay" regulation allowed firms to hold votes every two or three years. Depending on their voting frequency, firms experience alternating years where scrutiny on compensation varies following a plausibly exogenous cyclical pattern. In vote-years, firms reduce salaries and golden parachutes, but compensate for these cuts by increasing less-scrutinized compensation such as pensions. Total pay is similar across vote and no-vote years, and pay-for-performance is not stronger in vote years. These results are most consistent with greater window-dressing of compensation in times when firms are subject to heightened shareholder scrutiny.

Keywords: Executive compensation, CEOs, say on pay, Dodd-Frank, shareholder voice

JEL Classification: E44, G23, G28

Suggested Citation

Kronlund, Mathias and Sandy, Shastri, Does Shareholder Scrutiny Affect Executive Compensation? (December 3, 2018). Available at SSRN: or

Mathias Kronlund (Contact Author)

Tulane University ( email )

7 McAlister Drive
New Orleans, LA 70118
United States

Shastri Sandy

The Brattle Group ( email )

44 Brattle St
Cambridge, MA MA 02138
United States
312-315-8395 (Phone)

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