CEO Non-Compete Agreements, Job Risk, and Compensation

74 Pages Posted: 13 May 2018 Last revised: 1 May 2019

See all articles by Omesh Kini

Omesh Kini

Georgia State University

Ryan Williams

University of Arizona - Department of Finance

Sirui Yin

Miami University of Ohio

Multiple version iconThere are 2 versions of this paper

Date Written: April 20, 2019

Abstract

Using hand-collected data on chief executive officer (CEO) non-compete agreements (NCAs), we find that CEOs are less likely to have NCAs when they expect greater personal costs and more likely when firms expect to suffer greater harm if departing CEOs work with competitors. Additionally, we find that performance–turnover sensitivity is significantly stronger when CEOs have NCAs. Finally, we find that total compensation and incentive pay are higher if CEOs have enforceable NCAs. Our identification strategy exploits staggered state-level changes in NCA enforceability. Our findings suggest that restrictions on mobility have important implications for how boards monitor and compensate CEOs.

Keywords: CEO Non-Compete Contracts; CEO Mobility, CEO Performance-Turnover Sensitivity; CEO Pay; CEO Compensation Structure

JEL Classification: G30, G32, G34, K22, L22, L25

Suggested Citation

Kini, Omesh and Williams, Ryan and Yin, Sirui, CEO Non-Compete Agreements, Job Risk, and Compensation (April 20, 2019). Available at SSRN: https://ssrn.com/abstract=3170804 or http://dx.doi.org/10.2139/ssrn.3170804

Omesh Kini

Georgia State University ( email )

University Plaza
Atlanta, GA 30303-3083
United States
404-651-2656 (Phone)

Ryan Williams (Contact Author)

University of Arizona - Department of Finance ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States

Sirui Yin

Miami University of Ohio ( email )

Oxford, OH 45056
United States

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