Post-acquisition structuring of CEO pay packages: Incentives and punishments

Abstract

Posited on the asymmetric features of equity ownership and stock option pay, this article examines the extent to which acquisition activities affect boards of directors' decisions to restructure the incentive design of executive compensation packages in the post-acquisition period. For a recent dataset of 148 deals between 1996 and 2009, the article finds that acquirers' overpayment for target firms and equity financing are likely to require scapegoating, particularly under conditions of intervening poor performance and stronger board vigilance, inducing directors to respond to CEOs' overly risky and suboptimal selection of acquisition terms by enlarging the proportion of equity ownership disincentives at the expense of stock option incentives in executive pay contracts. By linking the incidence of large acquisition deals to an altered agency problem, the article proposes an alternative way to gauge how corporate boards enact their monitoring responsibilities based on CEOs' recent past strategic choices.

Governance mechanisms in the physician–patient relationship: a literature review and conceptual framework

“…57,58 The relationship is essentially hierarchic where the practitioner, because ª 2012 Blackwell Publishing Ltd Health Expectations, 16, pp. [14][15][16][17][18][19][20][21][22][23][24][25][26][27][28][29][30][31] Governance mechanisms in the physician-patient relationship, G Tofan, V Bodolica and M Spraggon Governance mechanisms in the physician-patient relationship, G Tofan, V Bodolica and M Spraggon of expert knowledge and skills, possesses the authority to make decisions on patients' behalf with little consideration of their preferences. 59 Being constrained to assume a passive role and submit to physician's professional judgments, patients ought to invest their trust in the physician's fiduciary obligation of making patients' health a top priority.…”

“…63 In a study of Australian patients, it was reported that the medical ª 2012 Blackwell Publishing Ltd Health Expectations, 16, pp. [14][15][16][17][18][19][20][21][22][23][24][25][26][27][28][29][30][31] Governance mechanisms in the physician-patient relationship, G Tofan, V Bodolica and M Spraggon literacy of consumers enhanced their trust in caregivers. 76 To regain patient trust, some scholars plead for a governance model of optional autonomy and collaboration between participants, 62 while others call for a renewed commitment to moral integrity and ethical decision making.…”

“…The identification of optimal governance mechanisms for the established interactional model is shaped by individual characteristics of participants and dependent upon the extent to which the physician provision of care is ª 2012 Blackwell Publishing Ltd Health Expectations, 16, pp. [14][15][16][17][18][19][20][21][22][23][24][25][26][27][28][29][30][31] matched to specific preferences of patients. 55 Our framework seeks to overcome the onesidedness of the paternalistic and informed decision-making models 57,58 and extend the interpretative 15,85 and shared decision-making models 57,58 beyond the recognition of the importance of both parties by contextualizing the relational encounter and considering the contingency of the physician-patient interaction.…”

“…9,10 The physician-patient relationship has long been modelled within the agency theory framework 11,12 , which relies on the principle of separation of ownership and control and highlights the need for implementing governance mechanisms for solving the arising principal-agent conflicts of interest. 13,14 By conceiving patients as principals who depend on physicians for medical advice, it became possible to illustrate the ensuing potential for inefficiencies in health-care provision and the urge for mitigating them. 15 The created opportunity for physicians to act self-interestedly at the patients' expense coupled with asymmetries of information between the two parties in the service exchange, exacerbated the need to uncover effective governance devices for alleviating the agency problems between physicians and patients.…”

Trust, authentic pride, and moral reasoning: a unified framework of relational governance and emotional self‐regulation

“…These norms include formal mechanisms of control which are enforced by a regulatory body or institution holding legitimate power. In the absence of internalized moral values, the only indication that these managers have of what can be justified as morally correct is provided by the national system of laws and regulations (Spraggon & Bodolica ). They will seek to inscribe their actions within the regulatory framework of their country with the objective of escaping from the harmful implications originating from a law‐infringing behavior.…”