limiting executive compensation the case of ceos hired after.pdfVIP

Limiting executive compensation: the case of CEOs hired after the imposition of 162(m). Steven Balsam Department of Accounting Fox School of Business and Management Temple University Philadelphia, PA 19122 email: drb@temple.edu phone: 215-204-5574 and David Ryan (contact author) Department of Accounting Fox School of Business and Management Temple University Philadelphia, PA 19122 email: ryan@temple.edu phone:215-204-8131 Limiting executive compensation: the case of CEOs hired after the imposition of 162(m). Abstract: This study analyzes the effect of Internal Revenue Code section 162(m) on the compensation package of CEOs. Research documents that CEO compensation has increased dramatically since the imposition of section 162(m), yet this research has not distinguished between the effects on the compensation of CEOs already in place when section 162(m) was imposed from those CEOs hired post-162(m) imposition. We focus our analysis on the compensation of CEO’s hired after the imposition of section 162(m) because firms have an opportunity at that point to redesign the executive pay package. Consequently, we posit that section 162(m) will have its greatest effect when the affected companies change CEOs. In addition, we examine the individual components of the compensation package because section 162(m) can lead to differential effects on the individual components of the package. These eff