Golden Hellos: Signing Bonuses for New Top Executives
Virginia Tech - Pamplin College of Business
Indiana University - Kelley School of Business - Department of Finance
October 22, 2015
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.
Number of Pages in PDF File: 58
Keywords: Executive compensation; Signing bonus; Termination risk; Incentive device
JEL Classification: J33, M52
Date posted: September 2, 2013 ; Last revised: October 27, 2015
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