Serial takeovers, large shareholders, and CEOs’ equity-based compensation
Pikulina,E.S. Renneboog,L.D.R.
Pikulina,E.S.
Renneboog,L.D.R.
Abstract
In this chapter we investigate how the structure of a CEO’s compensation package – and especially his bonus and equity-based compensation (EBC) – influences his M & A decisions. We find that a CEO with a higher proportion of EBC is more likely to initiate (serial) acquisitions. Likewise, a CEO who receives a larger bonus is more eager to be involved in takeovers. We argue that equity-based compensation along with strong performance requirements (stock options and restricted stock become vested only if specific performance criteria are met) induce managers to adopt aggressive growth strategies through M & As. Large outside shareholders reduce a firm’s takeover activity, which is also the case when a CEO holds a significant equity stake.
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Date
2015-07-31
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Edward Elgar Publishing Ltd.
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Citation
Pikulina, E S & Renneboog, L D R 2015, Serial takeovers, large shareholders, and CEOs’ equity-based compensation. in J Hill & R Thomas (eds), The Research Handbook on Shareholder Power. Research Handbooks in Corporate Law and Governance Series, Edward Elgar Publishing Ltd., Cheltenham, pp. 297-318. https://doi.org/10.4337/9781782546856.00028
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info:eu-repo/semantics/restrictedAccess