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What Do Unions Do to Executive Compensation?

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  • Rafael Gomez
  • Konstantinos Tzioumis

Abstract

We estimate the relation between union presence and executive compensation using a unique panel of executives in publicly listed US firms during the period 1992-2001. We find evidence that union presence is associated with lower levels of total executive compensation. We find this union effect to be primarily the result of substantially lower stock option awards, and to a lesser extent due to lower cash pay. Moreover, the negative relation between unionization and executive remuneration becomes larger at the higher end of the conditional distribution of executive remuneration. We also find that the elasticity of cash pay to financial performance is similar across unionized and non-unionized firms, and that union presence is associated with a more compressed intra-firm and inter-firm executive compensation structure.

Suggested Citation

  • Rafael Gomez & Konstantinos Tzioumis, 2006. "What Do Unions Do to Executive Compensation?," CEP Discussion Papers dp0720, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0720
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    9. Willman, Paul & Pepper, Alexander, 2020. "The role played by large firms in generating income inequality: UK FTSE 100 pay practices in the late twentieth and early twenty-first centuries," LSE Research Online Documents on Economics 101870, London School of Economics and Political Science, LSE Library.
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    12. Kuhnen, Camelia M. & Niessen-Ruenzi, Alexandra, 2008. "Is Executive Compensation Shaped by Public Attitudes?," CFR Working Papers 08-09, University of Cologne, Centre for Financial Research (CFR).
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    More about this item

    Keywords

    Unions; executive compensation; Implicit regulation;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • 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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