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RFS Advance Access originally published online on August 11, 2003
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Rev Fin 2004; 17:37-61
© 2004 The Society for Financial Studies

What's In It for Me? CEOs Whose Firms Are Acquired

Jay C. Hartzell
University of Texas at Austin

Eli Ofek
New York University

David Yermack
New York University

Address correspondence to Jay Hartzell, University of Texas at Austin, Department of Finance, 1 University Station B6600, Austin, TX 78712, or e-mail: Jay.Hartzell{at}bus.utexas.edu.

We study benefits received by target chief executive officers (CEOs) in completed mergers and acquisitions. Certain target CEOs negotiate large cash payments in the form of special bonuses or increased golden parachutes. These negotiated cash payments are positively associated with the CEO's prior excess compensation and negatively associated with the likelihood that the CEO becomes an executive of the acquiring company. Regression estimates suggest that target shareholders receive lower acquisition premia in transactions involving extraordinary personal treatment of the CEO. Target CEOs experience very high turnover rates both at the time of acquisition and, for those who remain employed, for several years thereafter.


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C. Wang and F. Xie
Corporate Governance Transfer and Synergistic Gains from Mergers and Acquisitions
Rev. Financ. Stud., March 26, 2008; (2008) hhn018v1.
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