10/22/2009

A study by McGill University professor Paul Kalyta shows that companies' stock prices can fall after a CEO retires. The study showed that when CEOs who were highly incentivized retired, stock prices over the next three years were 8.3% lower than those of comparable companies. Kalyta suggests the reason for the drop lies in the tenets of supplemental executive retirement plans, which call for retirement compensation to be based on the company's stock performance near the end of the CEO's tenure -- which could lead CEOs to whitewash earnings reports.

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