ABSTRACT
This chapter describes the most commonly examined characteristics of Mergers and Acquisitions (M&A) transactions namely the mode of payment and acquisition premium. The mode of payment relates to the type of executive pay components that received consideration in the relevant literature, while the acquisition premium addresses the specific approaches used to measure the payment mode and control premium. It focuses on an alternative measure of bidder's executive pay, pooling together long-term incentive plan (LTIP)s and stock ownership. The chapter considers the effect on control premiums of an atypical element of executive compensation package that relates to indirect benefits rather than direct payments, namely managerial liability insurance. The positive effects on the listed M&A characteristics, which occur when the financial wealth of bidding top executives is more closely tied to the stock price of their company, are more consistent with the underlying assumptions of the managerial risk-seeking hypothesis.
