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What do unions do to executive compensation?

  • Rafael Gomez
  • Konstantinos Tzioumis

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.

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File URL: http://eprints.lse.ac.uk/19865/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 19865.

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Length: 35 pages
Date of creation: May 2006
Date of revision:
Handle: RePEc:ehl:lserod:19865
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