September 2007

Are Large CEO Severance Packages Justified?
Research supports three motivations behind executive severance agreements: to encourage risk-taking, to provide job insurance, and to compensate CEOs in the instance of confidentiality requirements. While the question of whether or not CEO severance packages are excessive will certainly remain controversial, it is clear that the existence of substantial CEO severance packages has a theoretical foundation.

Thomas Lys

Tjomme O. Rusticus

Ewa Sletten