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Ceo Compensation And Turnover
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Book Synopsis CEO Compensation and Turnover by : Eliezer M. Fich
Download or read book CEO Compensation and Turnover written by Eliezer M. Fich and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent wave of revelations involving corporate governance problems has created significant interest in the relationships between chief executive officers (CEOs) and their boards of directors. In this paper we focus on one important but previously uninvestigated characteristic of boards: the tendency of many boards to have two (or more) directors who are also members of another company's board. We define this relationship as a mutual interlock. We explore the consequences of this phenomenon for CEO compensation and CEO turnover.Our empirical analyses - conducted for a sample of 366 large companies, in which 87% of the companies have at least one mutual interlock - show that CEO compensation tends to be higher and CEO turnover tends to be lower when the CEO's board has one or more pairs of board members who are mutually interlocked with another company's board. There are two possible interpretations of these results. One is that the mutual interlocks are an indication of and a contributor to CEO entrenchment, and the higher compensation and lower turnover follow from this entrenchment. The other is that the mutual interlocks are an indication of the strengthening of an important and valuable strategic alliance for the company, and the higher CEO compensation and lower turnover are the CEO's reward for arranging the alliance. We believe that the first interpretation is more accurate, for the reasons discussed in the paper.
Book Synopsis Compensation and Top Management Turnover by : Hamid Mehran
Download or read book Compensation and Top Management Turnover written by Hamid Mehran and published by . This book was released on 2008 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: An examination of CEO compensation and turnover in 452 large U.S. companies between 1984 and 1991 provides evidence that compensation policies play a significant role in retaining the services of top managers. We find inverse associations between the probability of CEO turnover and the amount by which their compensation is higher than expected. We also find inverse associations between the probability of CEO turnover and the dollar value of stock option compensation in relation to cash pay. The results, which are significant across the entire sample of CEOs, appear stronger for subsamples of CEO departures likely to have been voluntary.
Book Synopsis The Impact of the Likelihood of Turnover on Executive Compensation by : Jay C. Hartzell
Download or read book The Impact of the Likelihood of Turnover on Executive Compensation written by Jay C. Hartzell and published by . This book was released on 2008 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study analyzes the role of three incentive devices in managerial compensation: pay for performance, termination, and career concerns. A model is derived which shows that the three incentives are substitutes; where the termination (or career concerns) incentive is low, the optimal contract contains stronger pay-for-performance incentives. The empirical implication, then, is that the pay-for-performance sensitivity of managers should be decreasing (increasing) in the probability of termination (retirement). To test the model s predictions, I first use a sample of CEOs to estimate the probabilities of forced and voluntary turnover. Then, these estimated probabilities are compared to the CEOs estimated pay-for-performance sensitivity. The evidence is consistent with the hypothesis that boards consider the likelihood of termination when setting the compensation contract; the relationship between changes in CEO compensation and firm performance is decreasing in the estimated probability of forced turnover. While CEOs nearing retirement do not appear to have compensation that is increasingly sensitive to performance, their wealth does have increased sensitivity. Consistent with the model s intuition, the sensitivity of total CEO firm-related wealth to performance is positively related to the probability of voluntary turnover.
Book Synopsis Changes in the Structure of CEO Compensation and the Firm's Pay- Performance Sensitivity Following CEO Turnover by : David W. Blackwell
Download or read book Changes in the Structure of CEO Compensation and the Firm's Pay- Performance Sensitivity Following CEO Turnover written by David W. Blackwell and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We document significant improvements in earnings and stock returns after CEO turnover. Compared to old CEOs, new CEOs derive more of their compensation from salary and bonus and option grants, but less from stock holdings. The sensitivity of pay to performance increases significantly after a change in CEO. The salary and bonus of the new CEO is much more sensitive to performance than that of the old CEO; stock holdings and option grants are less sensitive. Changes in pay-performance sensitivity are greater after exogenous turnover than after exogenous turnover.
Book Synopsis CEO Turnover by : Kathleen Anne Farrell
Download or read book CEO Turnover written by Kathleen Anne Farrell and published by . This book was released on 1994 with total page 152 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis An Analysis of CEO Equity Compensation in an Incomplete Contracting Framework by : Matthias Kiefer
Download or read book An Analysis of CEO Equity Compensation in an Incomplete Contracting Framework written by Matthias Kiefer and published by Matthias Kiefer. This book was released on 2015-01-01 with total page 262 pages. Available in PDF, EPUB and Kindle. Book excerpt: I investigate whether equity grants increase the costs of CEO dismissal or departure (Oyer, 2004; Almazan and Suarez, 2003). I argue that costs of dismissal are increased because equity grants become exercisable upon forced departure. Equity grants can increase the costs of leaving because voluntarily departing CEOs forfeit equity compensation upon departure. I follow Rajgopal, Shevlin and Zamora (2006) in linking CEO equity compensation to a measure of labor market competition in a sample of S&P1500 companies from 1996 to 2010. I find that the intensity of labor market competition measured by a Herfindahl-Hirschman Index across industries and states affects equity grants and that the correlation is reversed in the penultimate year of forced CEO departure. This is consistent with the view that CEOs are concerned about being replaced in competitive labor markets and therefore demand more compensation that converts into severance pay. Conversely, when a dismissal is anticipated, I argue that CEOs are concerned about finding new employment and are then insured against a lack of outside opportunities. In addition, I conduct an empirical investigation of the relationship between stock options, restricted stock grants and other long-term compensation between 2001 and 2006. I argue that the Sarbanes-Oxley Act did not increase managerial accountability (see for example Cohen, Dey and Lys, 2005) and that new accounting rules did not increase accounting costs of stock options (see for example Hayes, Lemmon and Qiu, 2012). Instead, I suggest that the effective prohibition of executive loans from firms and brokers made it prohibitively costly for CEOs to exercise stock options. I find that stock options began to be replaced with other long-term compensation as early as 2004. CEOs began to accumulate vested but unexercised stock options. I do not find evidence that CEOs sold vested stock to raise funds.In the final empirical chapter, I consider whether a Herfindahl-Hirschman Index across industries and states can be interpreted as a proxy for labor market competition. Aggarwal and Samwick (1999) argue that it is product market competition that affects CEO equity grants. My results are consistent with Rajgopal, Shevlin and Zamora (2006) who do not find evidence that product market competition has any significant impact on equity grants. Instead, I find that labor market competition retains a significant and positive impact in our tests, and notably holds for the largest single product market. The principal limitations of the project were found to be the difficulty of collecting data of intended turnover and classifying it into forced and voluntary turnover. With respect to loans to executives, loans by brokers are usually not disclosed. This study is the first to analyze equity compensation as severance arrangement. CEO cash constraints in exercising options is an unexplored explanation for their disappearance.
Book Synopsis Investor Protection, CEO Pay and CEO Turnover by : Sihong Zhang
Download or read book Investor Protection, CEO Pay and CEO Turnover written by Sihong Zhang and published by . This book was released on 2015 with total page 212 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines CEO compensation and turnover in eight countries (including Australia, India, Ireland, Malaysia, Netherlands, New Zealand, South Africa and United Kingdom) from 2000 to 2013 period and focuses on how legal investor protection affects compensation and replacement decisions. I use logistic regressions to investigate the association between investor protection and pay-performance sensitivity, and the association between investor protection and turnover-performance sensitivity. My empirical analysis documents that in firms with stronger investor protection, CEO cash compensation and turnover are more sensitive to accounting performance. And such an effect of investor protection is more pronounced for firms with low level of earnings management. However, the association between investor protection and the CEO pay-performance relationship is weaker after including equity-based compensation.
Book Synopsis The Effect of Cross-listing on CEO Compensation and CEO Turnover by : Prasad Vemala
Download or read book The Effect of Cross-listing on CEO Compensation and CEO Turnover written by Prasad Vemala and published by . This book was released on 2012 with total page 180 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: Foreign firms that have cross-listed on stock exchanges in United States have achieved many benefits. However, the effect of cross-listing CEOs of firms that cross-list is little known. This study investigates the effect of cross-listing on CEO compensation and CEO turnover. Using a sample of firms from Canada that cross-listed on U.S. stock exchanges, this study finds that cross-listing does affect CEO pay and CEO turnover. In investigation this relationship, the study found that it is not the performance of the firms, but the status of cross-listing and board characteristics that cause CEO replacements. However, performance seems to affect CEO compensation both before and after cross-listing.
Book Synopsis Do Heads Roll? An Empirical Analysis of CEO Turnover and Pay When the Corporation is Federally Prosecuted by : Brandon L. Garrett
Download or read book Do Heads Roll? An Empirical Analysis of CEO Turnover and Pay When the Corporation is Federally Prosecuted written by Brandon L. Garrett and published by . This book was released on 2018 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Does the criminal prosecution of a corporation affect the CEO? Or do criminal actions directed at the organization itself pose few consequences for the individuals at the top, and the CEO in particular? While CEOs are rarely themselves prosecuted, organizations could discipline CEOs through paycuts or outright replacing the CEO in response to a criminal prosecution. We sought to examine whether and how that occurs. We focus our analysis on a dataset of public companies that settled criminal cases brought by federal prosecutors from 2000-2014. We compared those companies to the larger set of companies in the Execucomp database of S&P 1500 firms, focusing on CEO compensation and turnover during the same time period. We examined the time period before and after prosecution, and the year that the company resolved the criminal charges against the company. We found that in the year that the company settled its prosecution, through a guilty plea or a deferred or non-prosecution agreement, there was a significantly higher level of CEO turnover. However, we do not find evidence of CEO pay cut. Second, for the prosecuted firms that did not have CEO turnover after prosecution, there is no evidence of a reduction in compensation. Indeed, we observed a spike in CEO bonuses in the year of prosecution--confirming concerns expressed by judges, prosecutors, lawmakers, and academics that corporate prosecutions do not sufficiently impact high-level decision-makers like CEOs. For the prosecuted firms that did have CEO turnover after prosecution, there is some evidence of a pay cut, both to salary and bonus, prior to the replacement of the CEO. These results raise larger questions whether federal prosecutors targeting the most serious corporate crimes sufficiently incentivize accountability at the top.
Book Synopsis An Introduction to Executive Compensation by : Steven Balsam
Download or read book An Introduction to Executive Compensation written by Steven Balsam and published by Academic Press. This book was released on 2002 with total page 410 pages. Available in PDF, EPUB and Kindle. Book excerpt: General readers have no idea why people should care about what executives are paid and why they are paid the way they are. That's the reason that The Wall Street Journal, Fortune, Forbes, and other popular and practitioner publications have regular coverage on them. This book not only proposes a reason - executives need incentives in order to maximize firm value (economists call this agency theory) - it also describes the nature and design of executive compensation practices. Those incentives can take the form of benefits (salary, stock options), or prerquisites (reflecting the status of the executive within the organizational culture.
Book Synopsis Executive Compensation Best Practices by : Frederick D. Lipman
Download or read book Executive Compensation Best Practices written by Frederick D. Lipman and published by John Wiley & Sons. This book was released on 2008-06-27 with total page 336 pages. Available in PDF, EPUB and Kindle. Book excerpt: Executive Compensation Best Practices demystifies the topic of executive compensation, with a hands-on guide providing comprehensive compensation guidance for all members of the board. Essential reading for board members, CEOs, and senior human resources leaders from companies of every size, this book is the most authoritative reference on executive compensation.
Book Synopsis The impact of the likelihood of turnover on executive compensation by : Jay Carter Hartzell
Download or read book The impact of the likelihood of turnover on executive compensation written by Jay Carter Hartzell and published by . This book was released on 1998 with total page 312 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis CEO Pay Cuts and Forced Turnover by : Huasheng Gao
Download or read book CEO Pay Cuts and Forced Turnover written by Huasheng Gao and published by . This book was released on 2012 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study large discrete decreases in CEO pay and compare them to CEO forced turnover. The determinants are similar, as are the performance improvements after the action. After the pay cut, the CEO pay-for-performance sensitivity is abnormally high, such that the CEO can restore his pay level by reversing the poor performance. After either a pay cut or forced turnover, CEOs reduce investment and leverage, and improve performance, on average. Together, our results show that the possibility of these large compensation cuts provides ex ante incentives for CEOs to exert effort to avoid poor performance and that CEOs take actions to improve poor performance once pay is cut. The similarity of the causes and outcomes of large pay cuts compared to forced turnover suggests that large pay cuts are used as a substitute for forced turnover, helping to explain why forced turnover is rare.
Book Synopsis Going-Concern Opinions, Corporate Control, Executive Compensation and Management Turnover by : Bill Francis
Download or read book Going-Concern Opinions, Corporate Control, Executive Compensation and Management Turnover written by Bill Francis and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate economic consequences of going-concern opinions in terms of corporate control, executive compensation and management turnover. We argue that announcement of going-concern opinions either decreases firm value or signals negatively to investors. Therefore, upon the announcement of these opinions, companies are motivated to go through organizational changes to strengthen monitoring and restore investors' confidence. These organizational changes include modifications in corporate ownership, executive compensation and management turnover. Based on a sample period of 1995 - 2012 and using a difference-in-difference approach, we find that the existence of going-concern opinions results in decreases in ownerships of blockholders and institutional investors. In addition, the presence of these opinions decreases CEO compensation and increases subsequent turnovers of top managers and auditors. Our findings point out other adverse consequences of going-concern opinions besides declines in market value. Thus going-concern opinions might be useful for outside stakeholders to predict future organizational changes within companies.
Book Synopsis How to Make Boards Work by : A. Kakabadse
Download or read book How to Make Boards Work written by A. Kakabadse and published by Springer. This book was released on 2013-12-02 with total page 548 pages. Available in PDF, EPUB and Kindle. Book excerpt: How to Make Boards Work offers a unique view of the thinking and doing of governance. The outside-in perspective offers a holistic framework highlighting how global cultural, social and political diversity impact boards of directors. The inside-out perspective emphasizes how governance and boards can effectively realize sustainable value creation.
Book Synopsis Individual and Organizational Factors Surrounding Top Executive Turnover by : Stephanie Brecht-Bergen
Download or read book Individual and Organizational Factors Surrounding Top Executive Turnover written by Stephanie Brecht-Bergen and published by Logos Verlag Berlin GmbH. This book was released on 2018 with total page 226 pages. Available in PDF, EPUB and Kindle. Book excerpt: The author analyzes the multi-faceted phenomenon of top executive turnover from various theoretical angles and empirically shows how individual and organizational factors such as performance, compensation and gender relate to it. Managerial implications on how to deal with turnover in times of talent shortage are derived. The book contributes to turnover research in three distinct ways. From a corporate governance perspective, it inspects potential antecedents and consequences of top executive dismissal with a focus on firm performance consequences. Taking a labor economics view, it scrutinizes compensation structure as a likely antecedent of voluntary turnover. From an OB and HRM angle, it examines gender as a characteristic of top executives and possible antecedent of turnover.
Book Synopsis The Effects of Corporate Acquisitions on CEO Compensation and CEO Turnover of Family Firms by : Amedeo De Cesari
Download or read book The Effects of Corporate Acquisitions on CEO Compensation and CEO Turnover of Family Firms written by Amedeo De Cesari and published by . This book was released on 2016 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the impact of corporate acquisitions on CEO compensation and CEO turnover of family firms in Continental Europe. We find that CEOs in family firms do not experience an increase in their compensation during the post-acquisition period, while there is a positive and statistically significant association between the compensation of CEOs in non-family firms and their acquisition activity. This finding is consistent with the view that controlling family shareholders provide monitoring for CEOs mitigating managerial agency problems that arise from the separation of ownership and control. Further, we find that the likelihood of CEO turnover declines following an acquisition in non-family firms, suggesting that these acquiring CEOs do not face a higher likelihood of dismissal while they receive a higher level of compensation. In contrast, there is no significant impact of acquisitions on CEO turnover in family firms.
