Institutional Ownership and Restructuring Charges Shielding Effect on Executive Cash Compensation

While previous literature linked certain corporate governance mechanisms to stronger CEO‘s compensation shielding from restructuring charges, this study investigates the impact of shareholders ownership characteristics, distinguishing between institutions ownership vs. managerial ownership. We examined a longitudinal sample of 2,196 US restructuring firms for the period of 2001-2006. We found institutional ownership to negatively moderate the shielding effect between restructuring charges and CEO cash compensation after controlling for board size, dual CEO role, and firm performance. Implications from this study highlight the key role of shareholders ownership characteristics in relation to CEO compensation at a time when many firms are undergoing restructuring