Golden Hellos: Signing Bonuses for New Top Executives

We examine signing bonuses awarded to executives hired for or promoted to Named Executive Officer (NEO) positions at S&P 1500 companies during the period of 1992–2011. Executive signing bonuses are sizeable and increasing in use, and are labeled by the media as “golden hellos.” We find that executive signing bonuses are mainly awarded at firms with greater information asymmetry and higher innate risks, especially to younger executives, to mitigate the executives’ concerns about termination risk. When termination concerns are strong, signing bonus awards are associated with better performance and retention outcomes.

Keywords: Executive compensation; Signing bonus; Termination risk; Incentive device

JEL Classification: J33, M52

Suggested Citation: Suggested Citation

Xu, Jin and Yang, Jun, Golden Hellos: Signing Bonuses for New Top Executives (December 9, 2015). Journal of Financial Economics (JFE), 122(1), October 2016, pages 175-195., Available at SSRN: https://ssrn.com/abstract=2319204 or http://dx.doi.org/10.2139/ssrn.2319204