Boards of directors, top management compensation, and shareholder returns
Article Abstract:
According to the corporate governance process and agency theory, boards of directors should reward executives on the basis of financial returns to shareholders. Studies of this issue have been inconclusive, however, and have frequently employed arguable measures of shareholders' returns. This study employed time-event methodology, a technique from financial economics, to examine abnormal returns, which are returns to shareholders corrected for the movement of the overall market. Results suggest that neither variation in abnormal returns nor overall market movements influences compensation to top executives. Tentative explanations and implications for the role of boards of directors in evaluating and rewarding top management are discussed. (Reprinted by permission of the publisher.)
Publication Name: Academy of Management Journal
Subject: Business, general
ISSN: 0001-4273
Year: 1987
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Effects of board demography and directors' incentives on corporate greenmail decisions
Article Abstract:
This study explored the extent to which a board of director's demographic characteristics and the financial incentives of its outside members influence a company's decision to privately repurchase stock from a dissident stockholder. Companies were more likely to refrain from such "greenmail" transactions the longer the average tenure of their outside directors and the more similar the directors' principal occupations. In companies whose top management's equity interests were small, corporate resistance to greenmail was most likely when the outside directors' equity interests were high relative to their board compensation and their lengths of tenure were similar. (Reprinted by permission of the publisher.)
Publication Name: Academy of Management Journal
Subject: Business, general
ISSN: 0001-4273
Year: 1990
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