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Full-Text Articles in Business
Repricing And Executive Turnover, Narayanan Subramanian, Atreya Chakraborty, Shahbaz Sheikh
Repricing And Executive Turnover, Narayanan Subramanian, Atreya Chakraborty, Shahbaz Sheikh
Atreya Chakraborty
We examine whether the threat of executive turnover faced by a firm affects its decision to reprice stock options held by its executives. We estimate a model of voluntary turnover among top executives and show that the predicted turnover from this model is positively related to the probability of repricing. The relationship is robust to the inclusion of several known determinants of repricing. Our results are consistent with a model in which a tight labor market makes executives hard to replace, forcing firms to reprice stock options when they go underwater.
Changes In Ceo Compensation Structure And The Impact On Firm Performance Following Ceo Turnover, David W. Blackwell, Donna M. Dudney, Kathleen A. Farrell
Changes In Ceo Compensation Structure And The Impact On Firm Performance Following Ceo Turnover, David W. Blackwell, Donna M. Dudney, Kathleen A. Farrell
Department of Finance: Faculty Publications
We document changes in compensation structure following CEO turnover and relate them to future performance. Compared to outgoing CEOs, incoming CEOs derive a significantly greater percentage of their compensation from option grants and new stock grants. The voluntary turnover sample shows similar changes in compensation structure while the forced turnover sample results suggest that new stock grants drive the significant increase in incentive compensation following turnover. Post-turnover performance is positively associated with new stock grants as a percentage of total compensation in the full sample and when analyzing forced and voluntary turnovers separately. We find limited evidence that future operating …