Part 2D.2 of the Corporations Act 2001 (Cth) regulates the making of termination payments to company directors, with the aim of limiting or preventing companies from giving golden parachutes. Termination payments are prohibited unless they have shareholder approval, or they fall within...

We examine the relation between shareholder investment horizon and CEO horizon incentives derived from compensation contracts. We find that influential incumbent shareholders provide managers with short-horizon incentives to maximize current firm value when these shareholders plan to sell their...

We examine whether companies select compensation peer groups opportunistically to increase CEO pay. Using 608 firms from the Samp;P 1500, 2,154 peer firms identified from their proxy statements, and a pool of potential peers representing the firm's labor market in which it competes for talent,...

The primary way in which directors obtain necessary information is by attending board meetings. Bank directors, in particular, are strongly urged to attend meetings by regulators. We investigate whether such pressure is sufficient for bank directors to have good attendance records. Using data on...

Many corporations reward their outside directors with a modest fee for each board meeting they attend. Using a large panel data set on director attendance behavior in publicly-listed firms for the period 1996-2003, we provide robust evidence that directors are less likely to have attendance...

We show that long-term compensation is associated with higher pay in the financial industry and this association is stronger in markets with high competition for talent. We argue that this evidence supports models of competition for talent based on retention motives.

This paper attempts to interpret the reason for high failure rate in venture capital backed nascent entrepreneurship by applying contract theory and employing a theoretical model of contract choice between entrepreneurs and venture capitalists. The results of the model show that the suboptimal...

This study investigates the relation between the use of compensation consultants and CEO pay levels. Using new proxy statement disclosures from 2,116 companies, we examine claims that pay is higher in clients of compensation consultants, and test whether any pay differences in users and...

We develop an optimal dynamic contracting theory of overpay for jobs in which moral hazard is a key concern, such as investment banking. Overpaying jobs feature up-or-out contracts and long work hours, yet give more utility to workers than their outside option dictates. Labor markets feature...

We analyze a Tullock-type takeover contest between two CEOs. To deter wasteful influence activities in shareholder optimum, the parachute compensates the (potentially) foregone earnings of the contestant whose incentives to invest in such activities are strongest. Therefore, the parachute is...