Does the use of non‐GAAP earnings in compensation contracts lead to excessive CEO compensation? Efficient contracting versus managerial power

2020 ◽  
Author(s):  
Hangsoo Kyung ◽  
Jeff Ng ◽  
Yong George Yang
Keyword(s):  
Ceo Compensation ◽  
Compensation Contracts ◽  
Managerial Power

CEO Compensation and Acquired and Acquiring Companies in Large Corporate Acquisitions

GIS Business ◽  
2016 ◽  
Vol 11 (5) ◽  
pp. 01-13
Author(s):  
Simon Yang
Keyword(s):  
Firm Performance ◽  
Executive Compensation ◽  
Ceo Compensation ◽  
Relative Sensitivity ◽  
Matched Sample ◽  
Executive Pay ◽  
Corporate Acquisitions ◽  
Acquiring Firms ◽  
Managerial Power ◽  
To Receive

This paper examines the relative sensitivity of CEO compensation of both acquiring and acquired firms in the top 30 U.S. largest corporate acquisitions in each year for the period of 2003 to 2012. We find that total compensation and bonus granted to executive compensation for acquired companies, not acquiring companies, are significantly related to the amount of acquisition deal even after the size and firm performance are controlled for. Both acquiring and acquired CEOs are found to make the significantly higher compensation than the matched sample firms in the same industry and calendar year. We also find that executives with higher managerial power, as measured by a lower salary-based compensation mix, prior to a corporate acquisition are more likely to receive a higher executive pay in the year of acquisition. The association between executive compensation and managerial power seems to be stronger for acquired firms than for acquiring firms in corporate acquisition. Overall, our findings suggest that corporate acquisition has higher impacts on executive compensation for acquired firm CEOs than for acquiring firm CEOs.

Board Committee Overlap and the Use of Earnings in CEO Compensation Contracts

2022 ◽  
Author(s):  
Mary Ellen Carter ◽  
Luann J. Lynch ◽  
Melissa A. Martin
Keyword(s):  
Earnings Management ◽  
Performance Measures ◽  
Ceo Compensation ◽  
Incentive Contracts ◽  
Audit Committees ◽  
Implicit Relation ◽  
Compensation Contracts ◽  
Potential Alternative ◽  
Larger Sample

Using proxy statement data describing the terms of compensation contracts, we examine how overlapping membership between compensation and audit committees influences the use of earnings metrics in compensation. Although research predicts that such overlap could either increase or decrease the reliance on earnings, we find that firms with overlapping directors rely less on earnings-based performance measures in incentive contracts without altering the overall level of performance-contingent cash bonuses. In addition, we provide evidence that firms substitute earnings measures with measures less subject to earnings management. Our findings are robust to potential alternative explanations, extend to an implicit relation between earnings and compensation for a larger sample, and are not driven by the tendency toward an overlapping committee structure more broadly. This paper was accepted by Suraj Srinivasan, accounting.

Compensation Committees and CEO Compensation Incentives in U.S. Entrepreneurial Firms

2004 ◽  
Vol 16 (1) ◽  
pp. 35-56 ◽  
Author(s):  
Martin J. Conyon ◽  
Lerong He
Keyword(s):  
Ceo Compensation ◽  
Theoretical Models ◽  
Power Model ◽  
Entrepreneurial Firms ◽  
Compensation Committee ◽  
Ceo Incentives ◽  
Optimal Contracting ◽  
Managerial Power ◽  
Ceo Pay ◽  
Contracting Model

This study uses a sample of IPO firms to investigate the relation between the compensation committee, CEO compensation, and CEO incentives. We investigate two theoretical models: the three-tier optimal contracting model and the managerial power model. We find support for the three-tier agency model. The presence of significant shareholders on the compensation committee (i.e., those with share stakes in excess of 5 percent) is associated with lower CEO pay and higher CEO equity incentives. Firms with higher paid compensation committee members are associated with greater CEO compensation and lower incentives. The managerial power model receives little support. We find no evidence that insiders or CEOs of other firms serving on the compensation committee raise the level of CEO pay or lower CEO incentives.

Towards an institutional theory of managerial power on CEO compensation: an international test

2012 ◽  
Vol 2012 (1) ◽  
pp. 15814
Author(s):  
Jordan Otten ◽  
Edward Carberry ◽  
Marc van Essen ◽  
Hans Van Oosterhout
Keyword(s):  
Institutional Theory ◽  
Ceo Compensation ◽  
Managerial Power

Geographic and Industrial Corporate Diversification: The Level and Structure of Executive Compensation

2002 ◽  
Vol 17 (1) ◽  
pp. 1-24 ◽  
Author(s):  
Augustine Duru ◽  
David M. Reeb
Keyword(s):  
Executive Compensation ◽  
Ceo Compensation ◽  
Performance Criteria ◽  
Corporate Diversification ◽  
Geographic Diversification ◽  
Compensation Contracts ◽  
Industrial Diversification ◽  
Diversification Strategies ◽  
Ceo Pay ◽  
And Performance

We explore the relation between corporate diversification and CEO compensation. We document that geographic diversification provides a compensation premium, while industrial diversification is associated with lower levels of CEO pay. We also examine the effect of corporate diversification on the structure and performance criteria of CEO compensation contracts. We find that both diversification strategies are associated with a greater use of incentive-based compensation and with a greater reliance on market-based, rather than accounting-based measures of firm performance. Finally, we address the question of whether shareholders reward CEOs for corporate diversification. We document that while value-enhancing geographic diversification is rewarded, non-value-enhancing industrial diversification is penalized.

scholarly journals Investor protection and CEO compensation in family firms

2017 ◽  
Vol 14 (2) ◽  
pp. 17-29 ◽  
Author(s):  
Stefano Bozzi ◽  
Roberto Barontini ◽  
Ivan Miroshnychenko
Keyword(s):  
Ceo Compensation ◽  
Family Firms ◽  
Investor Protection ◽  
Institutional Context ◽  
Rent Extraction ◽  
Compensation Contracts ◽  
Eu Countries ◽  
Ceo Pay ◽  
The Relationship

This paper investigates the relationship between investor protection and CEO pay in family-controlled corporations. Using a panel of 986 firm-year observations from 11 EU countries, we show that the lower the investor protection, the higher the compensation of the CEO. The sensitivity of pay to the institutional context is higher for a family CEO than a professional CEO, a result that corroborates the hypothesis that CEO compensation contracts in family firms are influenced by familiar connections. Overall, these results are more consistent with the hypothesis of rent extraction than with the perspective of optimal remuneration contracts.

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