1st Edition

Mergers and Acquisitions and Executive Compensation

By Virginia Bodolica, Martin Spraggon Copyright 2015
    246 Pages
    by Routledge

    246 Pages
    by Routledge

    Over the past decades, the total value of executive compensation packages has been rising dramatically, contributing to a wider pay gap between the chief executive officer and the average worker. In the midst of the financial turmoil that brought about a massive wave of corporate failures, the lavish executive compensation package has come under an intense spotlight. Public pressure has mounted to revise the levels and the structure of executive pay in a way that will tie more closely the executive wealth to that of shareholders. Merger and acquisition (M&A) activities represent an opportune setting for gauging whether shareholder value creation or managerial opportunism guides executive compensation. M&As constitute major examples of high-profile events prompted by managers who typically conceive them as a means for achieving higher levels of pay, even though they are frequently associated with disappointing returns to acquiring shareholders.

    Mergers and Acquisitions and Executive Compensation reviews the existing empirical evidence and provides an integrative framework for the growing body of literature that is situated at the intersection of two highly debated topics: M&A activities and executive compensation. The proposed framework structures the literature along two dimensions, such as M&A phases and firm’s role in a M&A deal, allowing readers to identify three main streams of research and five different conceptualizations of causal relationships between M&A transactions and executive compensation.

    The book makes a comprehensive review of empirical studies conducted to date, aiming to shed more light on the current and emerging knowledge in this field of investigation, discuss the inconsistencies encountered within each stream of research, and suggest promising directions for further exploration. This book will appeal to researchers and students alike in the fields of organizational behavior and governance as well as accounting and accountability.

    List of Figures  List of Tables  List of Abbreviations  Preface  Part I: Overview of M&As and Executive Compensation  1. M&A Activities: Global Portrait and Merger Motives  2. Incentive Design of Executive Compensation Packages  3. Conceptual Framework Linking M&As with Executive Compensation  Part II: Bidders’ Executive Compensation before the Deal  4. Impact of Bidding Executive Compensation on Bidder-Specific M&A Occurrence  5. Impact of Bidding Executive Compensation on M&A Characteristics  Part III: Targets’ Executive Compensation before the Deal  6. Impact of Target-Specific M&A Occurrence (Threat of Takeover) on Target Executive Compensation  7. Impact of Target Executive Compensation on M&A Characteristics  Part IV: Acquirers’ Executive Compensation after the Deal  8. Impact of M&A Characteristics on Executive Compensation of Acquiring Firms  Part V: Discussion and Priorities for Future Research  9. Discussion of Extant Knowledge on M&As and Executive Compensation  10. Priorities for Future Research Endeavors in the Field  About the Authors  Index


    Virginia Bodolica is Associate Professor of Management at American University of Sharjah, School of Business and Management, UAE.

    Martin Spraggon is Associate Professor of Management at American University of Sharjah, School of Business and Management, UAE.

    "This book provides an excellent review of a crucial, contemporary issue in M&As and corporate governance, namely, are CEOs motivated to transact M&A deals just to maximize their own compensation, or act purely in shareholders best interests. With billions of dollars at stake for companies and economies, the motivation of CEOs to do these deals matters. This book provides clear insights into how value may be created and destroyed through CEO compensation." –Dr. Duncan Angwin, Professor and M&A Specialist, Oxford Brookes University, UK

    "In today’s fast moving business world, M&As are common options for business expansion. Boards are reviewing compensation systems to reward the right behavior and encourage executives to achieve corporate objectives without incurring higher risk than the board approves. The relationship between M&As and CEO remuneration is an important area of research that can add a lot of value to governance scholars and practitioners. I highly recommend reading this book." –Dr. Ashraf Gamal, CEO, Hawkamah, The Institute for Corporate Governance, UAE

    "A skillfully written, informative book and a remarkable up-to-date contribution to existing literature worldwide. Bodolica and Spraggon have succeeded in providing a compelling argument for an advanced, combined analysis of two recently growing and impactful trends – M&As and executive compensation. The book is a must read that should be recommended to researchers interested in examining the strategic value of the CEO pay setting processes around M&A transactions." –Dr. Alex Kostyuk, Director, Virtus Global Center for Corporate Governance & International Center for Banking and Corporate Governance, Ukraine