Journal of Finance Vol. 52 No. 4 1997

CEO Contracting and Antitakeover Amendments

Kenneth A. Borokhovich¹; Kelly R. Brunarski¹; Robert Parrino^2,3

¹ Miami University · ² Institute of Semitic Studies · ³ The University of Texas at Austin

Abstract

This article examines incentives for adopting antitakeover charter amendments (ATAs) that are associated with compensation contracts. The evidence is consistent with the hypothesis that antitakeover measures such as ATAs help managers protect above-market levels of compensation. Chief executive officers (CEOs) of firms that adopt ATAs receive higher salaries and more valuable option grants than CEOs at similar firms that do not adopt them. Furthermore, the magnitude of this difference increases following ATA adoption. The evidence is inconsistent with the hypothesis that ATAs facilitate the writing of efficient compensation contracts.

DOI

10.2307/2329444

Volume

52

Issue

4

Pages

1495

Sources

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Cite

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