The Pressure to Perform: Option Compensation and Forced CEO TurnoverInternational Journal of Business (2015)
We study the relationship between the proportion of option compensation in the total compensation of a CEO and the likelihood of forced turnover. Our results confirm prior findings that CEOs who receive higher option compensation are more likely to lose their jobs for poor performance. However, this positive relation between option compensation and forced turnover does not hold for influential CEOs and firms with poor governance structures. Our results are robust to various measures of firm performance, alternative definition of forced turnover, more than one lags of option compensation, inclusion of total compensation, CEO equity ownership and firm risk.
- stock options; compensation; termination; governance
Citation InformationAtreya Chakraborty and Shahbaz A Sheikh. "The Pressure to Perform: Option Compensation and Forced CEO Turnover" International Journal of Business Vol. 20 Iss. 4 (2015) ISSN: 1083-4346
Available at: http://works.bepress.com/shahbaz_sheikh/10/