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What do unions do to executive compensation?

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  • Gomez, Rafael
  • Tzioumis, Konstantinos

Abstract

In this paper we estimate the relation between union presence within a firm and CEO compensation, using a unique panel of publicly listed companies for the period 1992 to 2001. We find that, on average, union presence: 1) is significantly associated with lower levels of total CEO compensation; 2) affects the mix of CEO compensation by providing higher levels of base pay but much lower stock option values; 3) lowers dispersion across the major components of CEO remuneration and 4) does not significantly reduce the performance sensitivity of CEO compensation as compared to non-union firms. These results are consistent with several models of union influence.

Suggested Citation

  • Gomez, Rafael & Tzioumis, Konstantinos, 2006. "What do unions do to executive compensation?," LSE Research Online Documents on Economics 19865, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:19865
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    More about this item

    Keywords

    Unions; CEO compensation; implicit regulation;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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