Graduation Year

Fall 2010

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Henrik Cronqvist


This paper examines the “activist effect” on the levels and structures of CEO compensation when a company is targeted by a sample of activist groups. Activist investors are focused funds that use their resources to influence management of target investments in an effort to increase shareholder value. Due to their efforts to impose return enhancing agendas on the management of targets, activists have developed a reputation as “raiders” and are commonly feared by management. In this paper, the nature of activist investing is discussed, including a review of previous research on activism, and an explanation of why compensation changes are a logical focus for extension of the previous research. The study is based on a sample of hand-collected data of 53 activist investments from 2007 to 2008. This analysis finds that contrary to fears, evidence suggests that the presence of an activist – particularly larger more famous activist investors – is associated with an increase in total CEO compensation achieved through a change in compensation structure.