Compensation Committees' Treatment of Earnings Components in CEOs' Terminal Years
研究发现，在CEO任期最后一年，薪酬委员会在确定现金薪酬时，对应计利润中的可操控部分给予更低权重，并减少对销售管理费用负面影响的屏蔽，以抑制离任CEO的盈余操纵和短期投资行为。
ABSTRACT Compensation committees face special difficulties when setting pay in the last years of a CEO's tenure. For example, incentives to manipulate earnings for the purpose of enhancing earnings-based compensation are greater in CEOs' terminal years. We predict that compensation committees are aware of these incentives and adjust the relative weights placed on earnings components in the cash compensation function to mitigate the problem. Consistent with our prediction, we find that in CEOs' terminal years, positive changes in discretionary accruals receive significantly less weight than other income components in determining cash compensation. This provides new evidence that not all gains flow through to compensation. We also find that in non-terminal years, managers' compensation is partially shielded from the negative effects of selling, general, and administrative expenditures (SG&A), but this effect reverses in the terminal period, consistent with the compensation committee discouraging investment in legacy assets by outgoing CEOs. Overall, our findings suggest that compensation committees treat components of earnings differently when setting pay in the terminal period. JEL Classifications: M41; J33.