Stock-Based Compensation and Top Management Turnover

32 Pages Posted: 11 Nov 2008  

Hamid Mehran

Independent

David Yermack

New York University (NYU) - Stern School of Business

Date Written: May 1996

Abstract

We test the hypothesis that corporate managers leave their jobs less often when they receive stock-based compensation. In a sample of CEOs from 452 U.S. companies between 1984 and 1991, we find inverse associations between the probability of CEO turnover and the amount of stock option compensation in relation to cash pay. The association is even stronger when we exclude apparently involuntary CEO turnover. Our results suggest that stock-based compensation plays a significant role in helping firms retain the services of top managers.

Keywords: Compensation, Ownership, Incentives, Turnover

Suggested Citation

Mehran, Hamid and Yermack, David, Stock-Based Compensation and Top Management Turnover (May 1996). NYU Working Paper No. FIN-96-035. Available at SSRN: https://ssrn.com/abstract=1298300

Hamid Mehran (Contact Author)

Independent ( email )

No Address Available

David Yermack

New York University (NYU) - Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY 10012-1126
United States
212-998-0357 (Phone)
212-995-4220 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~dyermack

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