Entrenchment and severance pay in optimal governance structures

• 成果类型: Article
• 署名作者: Almazan, A; Suarez, J
• 署名单位: University of Texas System; University of Texas Austin
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/1540-6261.00536
• 发表日期: 2003
• 页码: 519-547
• 关键词: managerial compensation; golden parachutes; INTERNAL CONTROL; DIRECTORS; boards

摘要

This paper explores how motivating an incumbent CEO to undertake actions that improve the effectiveness of his management interacts with the firm's policy on CEO replacement. Such policy depends on the presence and the size of severance pay in the CEO's compensation package and on the CEO's influence on the board of directors regarding his own replacement (i.e., entrenchment). We explain when and why the combination of some degree of entrenchment and a sizeable severance package is desirable. The analysis offers predictions about the correlation between entrenchment, severance pay, and incentive compensation.