Compensation and Top Management Turnover

Hamid Mehran and David Yermack

New York University, Leonard N. Stern School Finance Department Working Paper Seires from New York University, Leonard N. Stern School of Business-

Abstract: 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.

Date: 1997-11
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Persistent link: https://EconPapers.repec.org/RePEc:fth:nystfi:98-051

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