What happens to CEO compensation following turnover and succession?
When boards hire CEOs, the board and successor CEO have an opportunity to redesign the predecessor's compensation contract. The CEO's relative bargaining power will influence the outcome of compensation negotiations. Analyzing 508 successions, we find that total compensation of successor CEOs increases by 69% over their predecessor, but the structure of successor compensation is heavily influenced by the predecessors' contracts. When the board's bargaining power is large, successors have a greater proportion of pay-at-risk and smaller proportion of salary. When the CEO's bargaining power is large, there is a smaller proportion of pay-at-risk and relatively greater proportion of salary.
Year of publication: |
2009
|
---|---|
Authors: | Elsaid, Eahab ; Davidson III, Wallace N. |
Published in: |
The Quarterly Review of Economics and Finance. - Elsevier, ISSN 1062-9769. - Vol. 49.2009, 2, p. 424-447
|
Publisher: |
Elsevier |
Keywords: | CEO turnover CEO succession Compensation Corporate governance |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
CEO compensation structure following succession: Evidence of optimal incentives with career concerns
Elsaid, Eahab, (2009)
-
The antecedents of simultaneous appointments to CEO and Chair
Davidson, Wallace Norman, (2008)
-
What happens to CEO compensation following turnover and succession?
Elsaid, Eahab, (2009)
- More ...