Golden Coffins: an Empirical Analysis

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2009-05
Authors
McGoldrick, Christopher
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Abstract
This paper studies death benefit payments that would be made to the estates of CEOs who die while in office. I develop a model based on the theory of managerial rent extraction to separately test the explanatory power of two widely used governance indexes in predicting the size of these awards. I then test the model on a subset of 125 companies within the S&P 500 that reported these benefits in their 2008 proxy statements. The average size of the death benefit awarded to the CEO was $22.2 million and I find that weaker governance structures as measured by the GIM Governance Index are associated with larger death benefits.
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