Were CEO pay cuts during the COVID-19 pandemic merely symbolic? Shareholders' reaction and outrage

We examine whether CEO pay cut announcements during the COVID-19 pandemic are symbolic and made to appease various stakeholders. We find that firms announcing a CEO pay cut are more likely to announce news that has a negative impact on their stakeholders, suggesting that pay cut announcements were used to alleviate stakeholder pressure. We also document that the pay cut announcements are associated with lower CEO salary but not total pay. In fact, our results suggest that pay cut announcements were symbolic, whereby salary cuts were substituted with increases in cash bonuses. Furthermore, we find a lower rate of shareholder dissent votes if a firm announced a pay cut. However, this effect is reduced if the CEO received higher total pay. Finally, we document higher shareholder dissent votes if a firm received government subsidies and paid higher CEO compensation or increased dividends. This suggests that shareholders do not prioritise their immediate financial interests and hold managers accountable for actions perceived negatively by the public.