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RFS Advance Access published online on August 11, 2003
Review of Financial Studies, doi:10.1093/rfs/hhg034
Review of Financial Studies © The Society for Financial Studies 2003; all rights reserved
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© 2003 The Society for Financial Studies

Original Articles

What's in It for Me? CEOs Whose Firms Are Acquired

Jay C. Hartzell 1*, Eli Ofek 2, and David Yermack 2
1 University of Texas at Austin
2 New York University

* To whom correspondence should be addressed. E-mail: Jay.Hartzell{at}bus.utexas.edu.


  Abstract

We study benefits received by target CEOs in completed mergers and acquisitions. Certain target CEOs negotiate large cash payments in the form of special bonuses or increased golden parachutes. These negotiated cash payments are positively associated with the CEO's prior excess compensation and negatively associated with the likelihood that the CEO becomes an executive of the acquiring company. Regression estimates suggest that target shareholders receive lower acquisition premia in transactions involving extraordinary personal treatment of the CEO. Target CEOs experience very high turnover rates both at the time of acquisitions and, for those who remain employed, for several years thereafter.


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[Abstract] [Full Text] [PDF]


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