CEO Dividend Protection

46 Pages Posted: 13 Jul 2013 Last revised: 22 Sep 2017

See all articles by Dan Zhang

Dan Zhang

Oslo and Akershus University College - Oslo Metropolitan University; BI Norwegian Business School

Date Written: August 15, 2017

Abstract

This paper studies CEO dividend protection, an important element in the executive compensation package that protect CEOs' compensation from stock price drops due to dividend payments. First, I show that there is large variation among S&P 500 firms in whether they provide dividend protections to their CEOs or not. Second, CEO dividend protection is positively associated with firms' dividend payout. Third, a time series analysis suggests that dividend protection is implemented prior to a firm increasing dividends. Finally, there is no evidence suggesting that CEO dividend protection affects other corporate policies, such as cash holdings and investment.

Keywords: Payout policy, Executive compensation, Dividend protection

JEL Classification: G30, M52

Suggested Citation

Zhang, Dan, CEO Dividend Protection (August 15, 2017). Available at SSRN: https://ssrn.com/abstract=2292847 or http://dx.doi.org/10.2139/ssrn.2292847

Dan Zhang (Contact Author)

Oslo and Akershus University College - Oslo Metropolitan University ( email )

PO Box 4, St Olavs plass
Oslo, 0130
Norway

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

HOME PAGE: http://www.bi.edu/research/employees/?ansattid=A1210112

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