We examine the effect of liability protection on the compensation of directors and on takeover outcomes. Consistent with the hypothesis that directors require additional compensation if they bear liability, we find that director compensation is higher for firms that provide less liability...

We examine the effects of executive compensation and investor protection on payout policy in Europe. We find a negative (positive) relationship between both option and restricted stock compensation and dividends (repurchases). However, when the incentive compensation is dividend protected,...