Two economics professors are about to publish the attached study about how CEO employment agreements change when their employers convert from public to private ownership. They focused on 20 companies that sold to the largest private equity firms, e.g. Blackstone, Carlyle, and Kohlberg. The general finding - that most CEO employment agreements underwent a major redesign – is not surprising. More interesting are the findings about particular changes that resulted, notably:
Regarding the sampled companies, the authors explained that large PE firms are generally in the best position to make value-maximizing decisions. The study is titled “CEO Contract Design: How Do Strong Principals Do It?” (forthcoming in Journal of Financial Economics).