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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26527
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| Title: | Golden Handshakes: Rewards for CEOs Who Leave |
| Authors: | Yermack, David |
| Issue Date: | Aug-2004 |
| Series/Report no.: | FIN-04-020 |
| Abstract: | This paper studies separation payments made when CEOs leave their firms.
In my sample of Fortune 500 companies these packages are widespread and
lucrative. Almost 80 percent of CEOs receive separation pay, and its
mean present value exceeds $4.5 million. Severance is positively
associated with future pay that CEOs might expect until age 65, and is
higher when CEOs depart involuntarily. Shareholders react negatively
when separation agreements are disclosed, but only in cases of voluntary
CEO turnover. Some evidence suggests that severance pay acts as a
bonding device between the board and CEO, while other evidence accords
with theories of rent extraction. |
| URI: | http://hdl.handle.net/2451/26527 |
| Appears in Collections: | Finance Working Papers
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