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Compensation and Top Management Turnover

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Author Info

  • Hamid Mehran
  • David Yermack

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.

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Bibliographic Info

Paper provided by New York University, Leonard N. Stern School of Business- in its series New York University, Leonard N. Stern School Finance Department Working Paper Seires with number 98-051.

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Date of creation: Nov 1997
Date of revision:
Handle: RePEc:fth:nystfi:98-051

Contact details of provider:
Postal: U.S.A.; New York University, Leonard N. Stern School of Business, Department of Economics . 44 West 4th Street. New York, New York 10012-1126
Phone: (212) 998-0100
Web page: http://w4.stern.nyu.edu/finance/
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Cited by:
  1. Balsam, Steven & Miharjo, Setiyono, 2007. "The effect of equity compensation on voluntary executive turnover," Journal of Accounting and Economics, Elsevier, vol. 43(1), pages 95-119, March.
  2. Raluca Georgiana NASTASESCU, 2009. "Stock Option Compensation and Managerial Turnover," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 10(2), pages 352-366, May.
  3. Hamid Mehran & Joseph Tracy, 2001. "The effect of employee stock options on the evolution of compensation in the 1990s," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 17-34.
  4. Elsaid, Eahab & Davidson III, Wallace N. & Benson, Bradley W., 2009. "CEO compensation structure following succession: Evidence of optimal incentives with career concerns," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(4), pages 1389-1409, November.
  5. Claire Bonnard, 2011. "Les incitations à l'innovation dans le secteur privé," Post-Print halshs-00599700, HAL.

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