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This study aims to examine the impact of CEO equity-based compensation (EBC) on employee wages. It also examines the impact of EBC on average employee wages in different industries and business cycles.

The authors use pay-performance sensitivity (PPS) to measure for CEO EBC and run OLS models with year and industry dummies. As many firms do not report labor expenses, the authors conduct the two-step analysis as in Heckman (1979) to overcome the potential selection bias.

The authors find that CEOs with higher EBC tend to pay their employees lower wages. They also find that such an impact is more evident in non-technology firms than in technology firms. Finally, they find that CEOs with higher PPS are more likely to depress employee wages when the business cycle shows a downturn.

No study examines the impact of EBC on employee wages directly to date. The authors add to the existing stream of literature regarding employee wages and managerial compensation. Hence, they purport that the findings support existing literature suggesting EBC contributes to, rather than alleviates, the classic agency conflict. Finally, the evidence suggests an unexplored manifestation of that agency conflict and an additional source of CEO rent extraction.

The purpose of this study is to explore post-acquisition compensation management and examine how the two most commonly used theories to explain CEO stock option exercise, agency theory and CEO overconfidence, expect CEOs to manage their stock options following an acquisition.

Using logistic regression analysis, the authors investigate whether CEOs are more or less likely to exercise options following an acquisition, and the effect which CEO tenure and acquisition history may have on option exercise.

The results suggest that CEOs are more likely to exercise options following an acquisition. The authors also find that CEO tenure and acquisition experience are both linked to an increase in option exercise.

The findings suggest that future research should expect agency effects to outweigh overconfidence effects when considering CEO stock option exercise behavior within the post-acquisition firm context.

This paper advises directors and shareholders about whether agency concerns or overconfidence are of greater concern and how CEO tenure and past acquisition history may influence post-acquisition CEO stock option exercise behavior, offering information valuable in designing effective corporate governance.

This paper is among the first to explore how CEOs manage their options following an acquisition and finds that CEOs are more likely to exercise stock options following an acquisition. Post-acquisition compensation management is an important, though overlooked, consideration in improving acquisition performance.