Institutional Investor Preferences and Executive Compensation (Revision of 2011-028)

J.A. McCahery, Z. Sautner

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Abstract

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.
Original languageEnglish
Place of PublicationTilburg
PublisherEBC
Number of pages23
Volume2012-002
Publication statusPublished - 2012

Publication series

NameEBC Discussion Paper
Volume2012-002

Keywords

  • Executive Compensation
  • Institutional Investors
  • Corporate Governance. JEL Codes

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    McCahery, J. A., & Sautner, Z. (2012). Institutional Investor Preferences and Executive Compensation (Revision of 2011-028). (EBC Discussion Paper; Vol. 2012-002). EBC.