I investigate the incentives provided by performance-vested stock awards (PVSAs) and the accuracy of ex ante PVSA valuations. In PVSAs, the number of shares awarded to the CEO varies based on how firm performance compares to target performance levels. The incentives provided by PVSAs and their valuations depend on the difficulty of the performance targets, which cannot be easily determined using ex ante disclosures. Using a hand-collected dataset of PVSA outcomes, I find that target difficulty is such that CEOs have incentives to earn additional shares from improved firm performance in 75 percent of PVSAs. In contrast, findings in prior studies using methodologies that rely on comparisons of PVSA targets to similarly named financial statement metrics suggest only 12 percent of awards provide such incentives. I further find that, on average, PVSAs pay out 115 percent of shares disclosed in ex ante valuations, suggesting the valuations of awards are understated. Data Availability: Data are available from sources cited in the text. PVSA outcome data are available upon request from the author.

We examine whether broad-based public engagement by institutional investors influences the behavior of portfolio firms. We investigate this question in the context of BlackRock’s annual Dear CEO letter, which in recent years has called for portfolio firms to acknowledge and quantify the impact of environmental and regulatory factors on their firms. We find that portfolio firms’ disclosures during the post-letter period reflect topics similar to those discussed in the letters, controlling for a variety of firm and disclosure characteristics and the occurrence of private engagements. Moreover, BlackRock appears to value these additional disclosures, as it more often votes with management on shareholder proposals during subsequent annual shareholder meetings. Finally, motivated by BlackRock’s attempts to mobilize firms toward its specific policy recommendations, we also provide some evidence that firms’ lobbying efforts during the post-letter period become more aligned with the issues highlighted in the letter, especially when firms’ share BlackRock’s policy preferences ex ante. Taken together, our evidence suggests that portfolio firms are responsive to BlackRock’s public engagement efforts.