What happens to CEO compensation following turnover and succession?

When boards hire CEOs, the board and successor CEO have an opportunity to redesign the predecessor\u27s compensation contract. The CEO\u27s relative bargaining power will influence the outcome of compensation negotiations. Analyzing 508 successions, we find that total compensation of successor CEOs increases by 69% over their predecessor, but the structure of successor compensation is heavily influenced by the predecessors’ contracts. When the board\u27s bargaining power is large, successors have a greater proportion of pay-at-risk and smaller proportion of salary. When the CEO\u27s bargaining power is large, there is a smaller proportion of pay-at-risk and relatively greater proportion of salary

The Determinants of Electric Utility Construction Expenditures

Wallace N. Davidson III and P. R. Chandy are Assistant Professors of Finance at North Texas State University

Guide to financial statement analysis : basis for management advice

https://egrove.olemiss.edu/aicpa_guides/1457/thumbnail.jp

Does experience matter? CEO successions by former CEOs

Purpose - This paper aims to investigate an interesting yet mostly ignored distinction within external CEO successions: outside successors who have previous CEO experience and those who do not. It examines stock market reaction, compensation and firm performance prior and post-succession. Design/methodology/approach - The authors used an event study, Patell Z-statistic and Rank Z-statistic to test cumulative abnormal return before and after the successions. They also used probit and OLS regressions to examine firm performance and CEO compensation prior and post-succession. Findings - The authors find that the stock market reacts positively to the hiring of an outsider who is an exCEO. Compared with firms that hire non-exCEOs, firms that hire exCEOs had higher debt ratios and greater bankruptcy chances pre-succession, but post-succession, these firms still have worse financial performances. Non-exCEOs come from better performing firms than exCEOs. There is no consistently significant difference in compensation between an exCEO and a non-exCEO, though the compensation for both increases significantly from that of the predecessors and that of their previous positions. Research limitations/implications - Future research could focus on the cost-benefit tradeoff of hiring an exCEO. It would be interesting to examine the role of the board of directors in assessing this cost-benefit tradeoff and determining the optimal choice for the firm. An important aspect that has not been sufficiently examined in the literature is the CEO fit. Hiring an exCEO may not always be the right choice for the firm. Another area for future research could examine how the post-succession performance is affected by exCEO tenure in previous CEO position(s) and whether the exCEO worked in several industries or in the same industry. Practical implications - This paper also has implications for the board of directors. There seems to be a negative transfer of human capital when it comes to hiring exCEOs. The human capital theory suggests that job-specific experience positively relates to job performance. According to Hamori and Koyuncu, prior CEO experience may lead to the formation of knowledge corridors and decision-making templates that make it difficult for individuals to take in inconsistent information or take actions that are different from past ones in a changed context. This, in turn, undermines performance . Boards of directors should put more effort into considering inside relay successions and should be cautious when hiring an outsider who has prior CEO experience. A best-of-both-worlds scenario may be for boards to hire exCEOs into top executive positions, such as COO and/or president, so as to give them a chance to be groomed for the top position and familiarize themselves with the firm while still benefiting from their prior CEO experience. Originality/value - There is very little research on the distinction between outside CEOs with previous CEO experience and those with no such experience. This paper tries to shed some light on this important issue in corporate governance in order to explain why boards of directors would hire an outsider with or without previous CEO experience

Market Response to the Airline, Natural Gas and Trucking Deregulation Acts: An Empirical Analysis

P.R. Chandy is an Associate Professor of Finance at North Texas State University. Wallace N. Davidson is an Associate Professor of Finance at North Texas State University. Michael C. Walker is an Associate Professor and Chairman of the Department of Finance at the University of Cincinnati

CEO Compensation Structure following Succession: Evidence of Optimal Incentives with Career Concerns

To motivate managers to pursue shareholder interests, boards may design management compensation packages to reward managers for good firm performance. However, note that when CEOs are far from retirement, they have career concerns. In these cases, Gibbons and Murphy argue that it may not be optimal for their current compensation to be too dependent on firm performance. Testing this proposition, we find that abnormal returns are negatively related to the percentage of performance-based pay of newly hired CEOs when companies announce CEO successions. Since these newly hired CEOs are likely some distance from retirement, we interpret these results as being consistent with Gibbons and Murphy; it may be better to allow newly hired CEOs to be paid in human capital increases from the managerial labor market than to have their current pay too closely related to performance

An Analysis of the Acquisition and Disposition of Real Estate Assets

This research studies the acquisition and disposition of real estate assets by non-real estate firms from 1981 through 1986. Contrary to previous studies of real estate assets, we find no abnormal performance associated with the buyers of real estate assets and only weak evidence of excess returns for sellers. When combining our results with previous work, we conclude that real estate assets themselves offer the market no unique opportunity to earn excess return. However, it appears that selected organizational forms may be preferred for managing some real estate assets. Thus, when the acquisition or disposition of a realty asset has no change in the management structure of the assets, as in this study, no excess return is found. Our study is limited by the relatively small number of sellers available for analysis.

Quantitative spectroscopy of Deneb

Quantitative spectroscopy of luminous BA-type supergiants offers a high potential for modern astrophysics. The degree to which we can rely on quantitative studies of this class of stars as a whole depends on the quality of the analyses for benchmark objects. We constrain the basic atmospheric parameters and fundamental stellar parameters as well as chemical abundances of the prototype A-type supergiant Deneb to unprecedented accuracy (Teff = 8525 +/- 75 K, log(g) = 1.10 +/- 0.05 dex, M_spec = 19 +/- 3 M_sun, L = 1.96 +/- 0.32 *10^5 L_sun, R = 203 +/- 17 R_sun, enrichment with CN-processed matter) by applying a sophisticated hybrid NLTE spectrum synthesis technique which has recently been developed and tested. The study is based on a high-resolution and high-S/N spectrum obtained with the Echelle spectrograph FOCES on the Calar Alto 2.2m telescope. Practically all inconsistencies reported in earlier studies are resolved. Multiple metal ionization equilibria and numerous hydrogen lines from the Balmer, Paschen, Brackett and Pfund series are brought into match simultaneously for the stellar parameter determination. Stellar wind properties are derived from H_alpha line-profile fitting using line-blanketed hydrodynamic non-LTE models. A self-consistent view of Deneb is thus obtained, allowing us to discuss its evolutionary state in detail by comparison with the most recent generation of evolution models for massive stars. (abridged)Comment: 17 pages, 12 figures. Accepted for publication in A&

Greenhouse gas emissions and energy use in UK-grown short-day strawberry (Fragaria xananassa Duch) crops

Original article can be found at: http://journals.cambridge.org/ Copyright Cambridge University PressReducing greenhouse gas emissions and optimizing energy consumption are important for mitigating climate change and improving resource use efficiency. Strawberry (Fragaria xananassa Duch) crops are a key component of the UK soft fruit sector and potentially resource-intensive crops. This is the first study to undertake a detailed environmental impact assessment of all methods of UK strawberry production. A total of 14 systems with six additional sub-systems grown for between 1 and 3 years were identified. They were defined by the growing of short-day (Junebearer) or everbearer varieties, organic production, covering with polytunnels or grown in the open, soil-grown (with or without fumigation) or container-grown (with peat or coir substrate) and summer or spring planted. Pre-harvest, the global warming potential varied between 1·5 and 10·3 t CO2 equiv/ha/crop or 0·13 and 1·14 t CO2 equiv/t of class 1 fruit. Key factors included the use of tunnels, mulch and irrigation, sterilization of soil with fumigants and the use of peat substrate. Seasonal crops without covers grown where rotation of sufficient length reduced Verticillium (system 4) were the most efficient. System 4a (that did not use mulch) emitted 0·13 t CO2 equiv/t of class 1 fruit. A second or third cropping year in soil-grown systems prolonged the effect of mulch and soil fumigants. Greenhouse gases from system 4 (with mulch) averaged 0·30 t CO2 equiv/t of class 1 fruit after 3 years of cropping compared to 0·63 and 0·36 t CO2 equiv/t after 1 and 2 years, respectively.Peer reviewe

Melt Inclusion Vapour Bubbles: The Hidden Reservoir for Major and Volatile Elements

Olivine-hosted melt inclusions (MIs) provide samples of magmatic liquids and their dissolved volatiles from deep within the plumbing system. Inevitable post-entrapment modifications can lead to significant compositional changes in the glass and/or any contained bubbles. Re-heating is a common technique to reverse MI crystallisation; however, its effect on volatile contents has been assumed to be minor. We test this assumption using crystallised and glassy basaltic MIs, combined with Raman spectroscopy and 3D imaging, to investigate the changes in fluid and solid phases in the bubbles before and after re-heating. Before re-heating, the bubble contains CO2 gas and anhydrite (CaSO4) crystallites. The rapid diffusion of major and volatile elements from the melt during re-heating creates new phases within the bubble: SO2, gypsum, Fe-sulphides. Vapour bubbles hosted in naturally glassy MIs similarly contain a plethora of solid phases (carbonates, sulphates, and sulphides) that account for up to 84% of the total MI sulphur, 80% of CO2, and 14% of FeO. In both re-heated and naturally glassy MIs, bubbles sequester major and volatile elements that are components of the total magmatic budget and represent a “loss” from the glass. Analyses of the glass alone significantly underestimates the original magma composition and storage parameters