Payday Before Mayday: CEO Compensation

UNIVERSITY OF TECHNOLOGY SYDNEY
Finance Department
Research Seminars in Finance

Topic: Payday Before Mayday: CEO Compensation Contracting for Distressed Firms

Speaker: Edith Hotchkiss, Boston College

Abstract:      

Using a sample of more than 1,400 US public firms in the period 1998-2016, we examine the link between CEO compensation and performance as firms become financially distressed. Distressed firms make frequent and significant adjustments to compensation contracts. Specifically, these firms increase their use of performance-based pay, but re-orient performance metrics towards cash flow related measures and set higher performance targets, and do not increase discretionary pay relative to pre-distress levels. These observed changes point toward the need to realign incentives for CEOs of distressed firms rather than rent extraction, and highlight the importance of compensation contracting as a mechanism to address agency problems faced by distressed firms.

Date: Wednesday, 13th March 2019     

Time: 12.00 – 1.00 p.m.

Venue: University of Technology Sydney
             Building 8, Room 8.002, Dr Chau Chak Wing Building
             Dr Chau Chak Wing Building
             14 - 28 Ultimo Road, Ultimo

Co-ordinator: Kris Glover  (Ph: +61 2 9514 7778)

Enquiries: Duncan Ford (Ph: +61 2 9514 7714)

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