The Easy Life of Superstar CEOS: Evidence from Shareholder Proposals and Mutual Fund Voting

Abstract

This paper examines the effect of “superstar” CEOs (i.e. CEOs that win prestigious business awards) on the voting behavior in shareholder proposals. We show that the superstar status strongly affects the outcome of shareholder proposals in favor of the management, both compared to all non-superstar CEOs and to a matched sample of non–winning CEOs. The superstar status affects the vote of all shareholders in general and of mutual funds in particular and is more pronounced in governance proposals and contested ones, showing that CEOs benefit from their superstar status by becoming immune to changes in governance policies promoted by shareholders.

Keywords: Superstar CEO, Business Awards, Corporate Governance, Shareholder Proposals, Mutual Funds, Mutual Fund Voting

JEL Classification: G32, G34