"We investigate the impact of changes in states' anti-takeover legislation on executive compensation. We find both pay for performance sensitivities and mean pay increase for the firms affected by the legislation (relative to a control group). These findings are partially consistent with an optimal contracting model of CEO pay as well as with a skimming model in which reduced takeover fears allow CEO's to skim more.... [O]ur evidence shows that the increased pay for performance offsets some of the incentive reduction caused by lower takeover threats."  MORE >>