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| Author: | Yermack, D. |
| Title: | Golden handshakes: Separation pay for retired and dismissed CEOs |
| Journal: | Journal of Accounting & Economics
2006 : SEP, VOL. 41:3, p. 237-256 |
| Index terms: | executives managers retirement pay USA |
| Language: | eng |
| Abstract: | In this paper, separation (hereafter as: sep.) payments made with CEOs leaving their firms are studied, using a sample of 179 exiting Fortune 500 CEOs. More than half receive severance pay (hereafter as: s-p.) and the mean sep. package is worth USD 5.4 million. The large majority of s-p. is awarded on a discretionary basis by the board of directors - not according to the employment agreement terms. For the subset of exiting CEOs who are dismissed, sep. pay generally conforms to theories related to bonding and damage control. Shareholders react negatively when sep. agreements are disclosed, but only in cases of voluntary CEO turnover. |
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