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Article: Layoffs, equity-based compensation, and CEO ownership.
- Article from:
- Journal of Academy of Business and Economics
- Article date:
- March 1, 2008
- Author:
CopyrightCOPYRIGHT 2008 International Academy of Business and Economics. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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ABSTRACT
We investigate the relation between CEO equity compensation and layoffs. In particular, we measure the extent of CEO stock selling in the year of the layoffs. We find that CEOs who layoff workers engage in little or no selling of stock acquired through stock-based compensation. Non-layoffs CEOs sell substantial shares after receiving stock compensation. Our results indicate that equity compensation succeeds in lifting the incentive levels of CEOs who announced layoffs, despite the controversy over self-interest layoffs decisions. Moreover, CEOs perceive the restructuring layoffs as value-enhancing activities or tend to avoid conveying negative signals to ...