Executive Compensation
Description
Professor Sandino’s other stream of research examines players that influence the design of an executive’s compensation. She has examined the role shareholder activists can play in influencing CEO pay and found that a compensation-related shareholder proposal could affect CEO pay and could pressure management to adopt the shareholders’ preferred method of disclosing executive pay. She has also examined the role of compensation consultants and found that, in situations where such consultants have a potential conflict of interest (for example, if they provide other services to the firm), CEO pay is typically higher. But while the relationship between the use of consultants and CEO pay is partly due to these conflicts of interest, it is largely explained by the composition and complexity of CEO pay plans. Firms with higher-paid CEOs and more complex pay plans are also more likely to hire a compensation consultant, while the use of consultants is also associated with increases in the incentive component and complexity of CEO pay.