- shareholder’s votes •
- Say-on-Pay •
- Financial institutions •
- small shareholders
We examine the relation between an institution’s stock ownership and its tendency to support corporate management through the “Say-on-Pay” (SOP) executive compensation vote.
Institutional advisors are more likely to oppose management on the SOP vote for their small-scale investments, i.e., investments that comprise a small fraction of an institution’s aggregate stockholdings across its funds, or, alternatively, investments that comprise a small fraction of the total equity market capitalization of a corporation. We find evidence indicating that this voting pattern reflects an institutions’ overall sentiment for the stock, and is particularly prevalent when institutions have limited attention to monitor their investments.