U.S. Chiefs Set for Big Payoffs Sell More Cheaply, Study Says

Investors in U.S. companies taken over between 1999 and 2007 “typically” lost $249 million on each transaction where chief executives had “overly generous” severance pay in place, according to a study published today.

Larger so-called golden parachutes encouraged some executives to compromise the interests of shareholders in mergers and acquisitions, the study found. Professor Eliezer Rich and Professor Ralph Walking, from the LeBow College of Business at Drexel University in Philadelphia, and Dr Anh Tranh, a lecturer Cass Business School in London, looked at 850 deals announced during the period.