Title: Merger and acquisition related determinants of executive compensation arrangements' adoption

Authors: Virginia Bodolica, Michel Magnan, Martin Spraggon

Addresses: Industrial Relations Department, University of Quebec in Outaouais (UQO), 101, Saint-Jean-Bosco Street, Case postale 1250, succursale Hull, Gatineau (Quebec), J8X 3X7, Canada. ' John Molson School of Business, Concordia University, 1455, de Maisonneuve West, Montreal (Quebec), H3G 1M8, Canada. ' Administrative Sciences Department, University of Quebec in Outaouais (UQO), 101, Saint-Jean-Bosco Street, Case postale 1250, succursale Hull, Gatineau (Quebec) J8X 3X7, Canada

Abstract: Previous research has investigated the links between Mergers and Acquisitions (M&As) and the monetary magnitude of executive compensation, but failed to inquire how the adoption of specific attributes of compensation contacts relates to M&A activities. We address this gap in the literature by examining the impacts of some M&A characteristics and acquirers| features on the adoption of executive compensation protection provisions and new Long-Term Incentive Plans (LTIPs). The study adopts a longitudinal design before–after M&A deals for 80 Canadian acquiring companies that engaged in M&A activities between 1995 and 2001. Our findings suggest that both transactional and organisational characteristics significantly explain the executive compensation arrangements| adoption around M&A transactions, but that the adoption of new LTIPs is subjected to a different set of determinants than the adoption of compensation protection provisions. We interpret these results in the light of the agency, political and institutional perspectives.

Keywords: corporate governance; executive compensation; employment agreement; termination clause; change of control clause; new LTIPs; M&As; mergers and acquisitions; method of payment; control premium; business governance; Canada.

DOI: 10.1504/IJBGE.2007.015209

International Journal of Business Governance and Ethics, 2007 Vol.3 No.4, pp.407 - 429

Available online: 26 Sep 2007 *

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