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Fabrizio Ferri

Assistant Professor of Business Administration (Leave of Absence)

Contact (617) 495-6925
Overview Biography Publications & Course Materials Current Research Areas of Interest

Published Papers

Ertimur, Yonca, Fabrizio Ferri, and Stephen R. Stubben. "Board of Directors' Responsiveness to Shareholders: Evidence from Shareholder Proposals." Journal of Corporate Finance (forthcoming). Abstract

In recent years, boards have become significantly more likely to implement non-binding, majority-vote (MV) shareholder proposals. Using a sample of 620 MV proposals between 1997 and 2004, we find that shareholder pressure (e.g., the voting outcome and the influence of the proponent) and the type of proposals are the main determinants of the implementation decision, while traditional governance indicators do not seem to affect the decision. We then examine the labor market consequences of the implementation decision for outside directors and find that directors implementing MV shareholder proposals experience a one-fifth reduction in the likelihood of losing their board seat as well as other directorships.
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Ferri, Fabrizio. "Discussion of 'Explicit Relative Performance Evaluation in Performance-vested Equity Grants'." Review of Accounting Studies 14, nos. 2-3 (September 2009).

Ferri, Fabrizio, and Tatiana Sandino. "The Impact of Shareholder Activism on Financial Reporting and Compensation: The Case of Employee Stock Options Expensing." The Accounting Review (March 2009). Abstract

In this paper we examine the economic consequences of over 150 shareholder proposals to expense employee stock options (ESO) submitted during the proxy seasons of 2003 and 2004 - the first case where the SEC has allowed an accounting matter to be subject to an advisory vote at an annual meeting. We find evidence suggesting that ESO expensing shareholder proposals affected accounting and compensation choices. With respect to accounting choices, we find that: (i) targeted firms were more likely to adopt ESO expensing relative to a control sample of S&P 500 firms, (ii) within targeted firms, the likelihood of adoption increases in the degree of voting support for the proposal; (iii) non-targeted firms were more likely to adopt ESO expensing when a peer firm was targeted by a proposal. With respect to the effect on compensation practices, we find that: (i) targeted firms where the proposal was approved experienced a decrease in the level of CEO compensation relative to the control sample of S&P 500 firms; (ii) within targeted firms, the degree of voting support for the proposal was associated with a decrease in the level of CEO compensation and a decrease in the use of ESO in CEO compensation.
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Other Papers

Ferri, Fabrizio. "The Structure of Option Repricings: Determinants and Consequences."

Ferri, Fabrizio, and David Maber. "Say on Pay Vote and CEO Compensation: Evidence from the UK." Working Paper. (Winner of the 2009 Best Paper Award presented by the Management Accounting Section of the American Accounting Association.) Abstract

In this study, we examine the effect on CEO pay of new legislation introduced in the UnitedKingdom (UK) at the end of 2002 that requires publicly-traded firms to submit an executiveremuneration report to a non-binding shareholder vote (“say on pay”) at the annual general meeting.Based on a large sample of UK firms over the period from 2000 to 2005, we find no evidence of achange in the level and growth rate of CEO pay after the adoption of say on pay. However, wedocument an increase in the sensitivity of CEO cash and total compensation to negative operatingperformance, particularly in firms with excessive compensation in the “pre” period (2000-2002) and infirms with high voting dissent. To assess whether the results are driven, respectively, by othergovernance changes in the UK or global trends in the CEO labor market, we use a control sample ofUK firms not subject to the new rule (within-country test) and a control sample of US firms (betweencountrytest). These tests confirm the increase in sensitivity of CEO cash and (more weakly) total payto negative operating performance. Our findings are consistent with widespread calls for less “rewardsfor failure” that led to the legislation’s introduction and may be of interest to regulators and investorswho are pondering the merits of a similar rule in the US and in other countries.
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Ferri, Fabrizio, Garen Markarian, and Tatiana Sandino. "Stock Option Expensing Evidence from Shareholders' Votes." Working Paper. (Winner of the 2004 Outstanding Paper in Corporate Finance presented by Eastern Finance Association.)

HBS Course Materials

Ferri, Fabrizio, and James Weber. "AFSCME vs. Mozilo...and "Say on Pay" for All! (A)." Harvard Business School Case 109-009.

Ferri, Fabrizio, and James Weber. "AFSCME vs. Mozilo...and "Say on Pay" for All! (A) (Abridged)." Harvard Business School Case 309-101.

Ferri, Fabrizio, and James Weber. "AFSCME vs. Mozilo...and "Say on Pay" for All! (B)." Harvard Business School Supplement 109-057.

Narayanan, V.G., Fabrizio Ferri, and Lisa Brem. "Executive Pay and the Credit Crisis of 2008." Harvard Business School Case 109-036.

Ferri, Fabrizio, V.G. Narayanan, and James Weber. "Shareholder Activists at Friendly Ice Cream (A)." Harvard Business School Case 108-024.

Ferri, Fabrizio, V.G. Narayanan, and James Weber. "Shareholder Activists at Friendly Ice Cream (A1)." Harvard Business School Case 109-013.

Narayanan, V.G., Fabrizio Ferri, and James Weber. "Shareholder Activists at Friendly Ice Cream (A2)." Harvard Business School Supplement 109-014.

Narayanan, V.G., Fabrizio Ferri, and James Weber. "Shareholder Activists at Friendly Ice Cream (B)." Harvard Business School Supplement 108-073.

Ferri, Fabrizio. "Timing of Option Grants at UnitedHealth Group (A)." Harvard Business School Case 107-028.

Ferri, Fabrizio. "Timing of Option Grants at UnitedHealth Group (B)." Harvard Business School Supplement 107-037.

Desai, Mihir A., Fabrizio Ferri, and Steve Treadwell. "Understanding Economic Value Added." Harvard Business School Note 206-016.