Nonbinding Voting for Shareholder Proposals

Levit, Doron; Malenko, Nadya

doi:10.1111/j.1540-6261.2011.01682.x

Cited by 120 publications

(38 citation statements)

References 41 publications

(48 reference statements)

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“…In other words, say-on-pay votes may be less affected by strategic voting because of their advisory rather than binding nature. See Levit and Malenko [2011] for a more detailed discussion of the differences between the advisory nature of binding and nonbinding shareholder votes. no evidence that the level of shareholder support for these proposals is associated with future CEO compensation.…”

Section: Effect Of Institutional Shareholder Activismmentioning

confidence: 99%

The Efficacy of Shareholder Voting: Evidence from Equity Compensation Plans

Armstrong

Gow²,

Larcker

2013

J of Accounting Research

125

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This study examines the effects of shareholder support for equity compensation plans on subsequent CEO compensation. Using cross-sectional regression, instrumental variable, and regression discontinuity research designs, we find little evidence that either lower shareholder voting support for, or outright rejection of, proposed equity compensation plans leads to decreases in the level or composition of future CEO incentive compensation. We also find that, in cases where the equity compensation plan is rejected by shareholders, firms are more likely to propose, and shareholders are more likely to approve, a plan the following year. Our results suggest that shareholder votes for equity pay plans have little substantive impact on firms' incentive compensation policies. Thus, recent regulatory efforts aimed at strengthening shareholder voting rights, particularly in the context of executive compensation, may have limited effect on firms' compensation policies. Abstract: This study examines the effects of shareholder support for equity compensation plans on subsequent chief executive officer (CEO) compensation. Using cross-sectional regression, instrumental variable, and regression discontinuity research designs, we find little evidence that either lower shareholder voting support for, or outright rejection of, proposed equity compensation plans leads to decreases in the level or composition of future CEO incentivecompensation. We also find that in cases where the equity compensation plan is rejected by shareholders, firms are more likely to propose, and shareholders are more likely to approve, a plan the following year. Our results suggest that shareholder votes have little substantive impact on firms' incentive-compensation policies. Thus, recent regulatory efforts aimed at strengthening shareholder voting rights, particularly in the context of executive compensation, may have limited effect on firms' compensation policies.

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Section: Effect Of Institutional Shareholder Activismmentioning

confidence: 99%

The Efficacy of Shareholder Voting: Evidence from Equity Compensation Plans

Armstrong

Gow²,

Larcker

2013

J of Accounting Research

125

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“…As a result, the analysis provides novel predictions on the factors that contribute to e¤ective communications between investors and …rms. The (Bhattacharya (1997) and Levit and Malenko (2011)), and shareholder activism (Cohn and Rajan (2013), Harris and Raviv (2010)). Unlike these studies, here the focus is on the interaction of shareholder communications (private and public) with voice and exit.…”

Section: Introductionmentioning

confidence: 99%

Soft Shareholder Activism

Levit

2012

SSRN Journal

Self Cite

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This paper studies communications between investors and firms as a form of corporate governance. The main premise is that activist investors cannot force their ideas on companies; they must persuade the board or other shareholders that implementing these ideas is in the best interest of the firm. In this framework, I show that voice (launching a public campaign) and exit (selling shares) enhance the ability of activists to govern through communication. The analysis identifies the factors that contribute to successful dialogues between investors and firms. It also shows that public communications are likely to be ineffective, justifying the prevalence of behind-the-scenes communications. Abstract This paper studies communications between investors and …rms as a form of corporate governance. The main premise is that activist investors cannot force their ideas on companies; they must persuade the board or other shareholders that implementing these ideas is in the best interest of the …rm. In this framework, I show that voice (launching a public campaign) and exit (selling shares) enhance the ability of activists to govern through communication. The analysis identi…es the factors that contribute to successful dialogues between investors and …rms. It also shows that public communications are likely to be ine¤ective, justifying the prevalence of behind-the-scenes communications.

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“…The target firms also often tend to be underperforming and low-leveraged ones. Levit and Malenko (2011) further pointed out the ''non-binding'' trait of some shareholder proposals, meaning management could still reject the proposal approved by shareholders, and illustrated that a non-binding vote would fail if the interests of the management team and shareholders are not aligned. Shareholder activists could influence the managers only if the interests of the two parties are in-line.…”

Section: -2011: Board Responsiveness Toward Shareholder Activismmentioning

confidence: 97%

Exploring the research fronts and main paths of literature: a case study of shareholder activism research

Vincent

Liu

2016

Scientometrics

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As a relatively young and vibrant discipline, shareholder activism has evolved to become a critical element of corporate governance research. While both finance and law scholars have revealed strong interest on shareholder activism, the heterogeneity in the research concentration of these two fields makes shareholder activism a fragmented discipline. We believe it would be interesting and insightful to conduct a citation-based analysis through the case study encompassing related articles on this topic published in both finance and law journals. We have adopted main path analysis to map out the evolution and research fronts of shareholder activism spanning over 30 years. The results indicated that shareholder activism research has developed in several stages: discussions on theoretical foundation, explorations on the ''shareholder activism versus firm performance'' correlation, the exceptions to the ''oneshare, one-vote'' rule, the emergence of hedge fund activism research, and the recent ''say-onpay'' campaigns. Edge-betweenness based clustering was used to categorize the citation network into coherent groups, with the most popular themes for the period 2003-2013 including ''pressure and monitoring from institutional investors'', ''shareholder activism in CSR and climate change'', ''say-on-pay movement and board responsiveness'', and ''shareholder voting and shareholder rights''. The trends are also discussed herein. This case study should contribute to future studies in both the practical and academic arenas.

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Nonbinding Voting for Shareholder Proposals

Cited by 120 publications

References 41 publications

The Efficacy of Shareholder Voting: Evidence from Equity Compensation Plans

The Efficacy of Shareholder Voting: Evidence from Equity Compensation Plans

Soft Shareholder Activism

Exploring the research fronts and main paths of literature: a case study of shareholder activism research

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