An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Pavlo Kalyta
Concordia University - Department of Accountancy

Michel Magnan
Concordia University

Abstract: The vagueness of disclosure, the lack of research and anecdotes of high payouts have led business observers to call Supplemantal Executive Retirement Plans (SERPs) the ultimate form of "stealth compensation". In this study, we explore SERP benefits and their link with corporate governance. Our results indicate that omitting SERP benefits alters the picture of executive compensation, underestimating its magnitude, distorting comparisons among executives, and compromising statistical analyses that employ total compensation unaccounted for SERP benefits. We find that SERP benefits are primarily driven by non-economic determinants, including corporate governance factors. The study contributes to compensation and governance literature, and supports regulations on enhanced SERP disclosure recently proposed by the SEC.

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