EconPapers    
Economics at your fingertips  
 

CEO Compensation Practices around Spinoffs

John S. Howe and Scott O’Brien

A chapter in Global Corporate Governance, 2017, vol. 19, pp 167-208 from Emerald Publishing Ltd

Abstract: Abstract We examine the use of relative performance evaluation (RPE), asymmetry in pay for skill/luck, and compensation benchmarking for a sample of firms involved in a spinoff. The spinoff affects firm characteristics that influence the use of the identified compensation practices. We test for differences in the compensation practices for the pre- and post-spinoff firms. We find that RPE is used for post-spinoff CEOs, but not pre-spinoff CEOs. Post-spinoff CEOs are also paid asymmetrically for luck where they are rewarded for good luck but not punished for bad luck. Both pre- and post-spinoff CEOs receive similar levels of compensation benchmarking. The study provides additional evidence on factors that influence compensation practices. Our spinoff sample allows us to examine how compensation practices are affected by changes in firm characteristics while keeping other determinants of compensation constant (i.e., the board and, in many cases, the CEO). Our findings contribute to the understanding of how the identified compensation practices are used.

Keywords: CEO compensation; relative performance evaluation; pay for luck; benchmarking; spinoffs (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.emeraldinsight.com/10.1108/S1569-373220 ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:afeczz:s1569-373220160000019007

Ordering information: This item can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://www.emeraldgr ... ies.htm?id=1569-3732

Access Statistics for this chapter

More chapters in Advances in Financial Economics from Emerald Publishing Ltd
Bibliographic data for series maintained by Charlotte Maiorana ().

 
Page updated 2022-03-28
Handle: RePEc:eme:afeczz:s1569-373220160000019007