Restrictions on CEO Mobility, Performance-Turnover Sensitivity, and Compensation: Evidence from Non-Compete Agreements

63 Pages Posted: 30 May 2018

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: May 29, 2018

Abstract

Using hand-collected data on CEO non-compete agreements (NCAs), we find that CEOs are less likely to have NCAs when they face greater employment risk and more likely when firms expect to suffer greater harm if departing CEOs work with competitors in some capacity. Additionally, we find that the 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, Restrictions on CEO Mobility, Performance-Turnover Sensitivity, and Compensation: Evidence from Non-Compete Agreements (May 29, 2018). Available at SSRN: https://ssrn.com/abstract=3186802 or http://dx.doi.org/10.2139/ssrn.3186802

Omesh Kini

Georgia State University ( email )

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

Ryan Williams

University of Arizona - Department of Finance ( email )

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

Sirui Yin (Contact Author)

Miami University of Ohio ( email )

Oxford, OH 45056
United States

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