An extensive literature finds that CEO compensation, especially bonus pay, exhibits downward rigidity. This is despite corporate boards usually retaining the discretion to deviate from their stated bonus formulae. We conjecture that the infrequent occasions in which there is an unexpected bonus cut, the board likely possesses unfavorable private information about the firm's long-term prospects and the CEO's ability. We hypothesize, therefore, that unexpected bonus cuts will be predictive of the company's future operating performance as well as forced CEO turnovers. We first validate our private information premise by showing that stock market reactions to CEO firings or earnings announcements are muted for firms experiencing unexpected bonus cuts but not for those without cuts. Consistent with these predictions, we find that unexpected bonus cuts are robust predictors of subsequent underperformance (ROE) and lower firm valuation (Tobin's Q) as well as CEO firings. Further, we examine the impact of Regulation S-K (2006) and show that predictive power becomes stronger post Reg. S-K, along with the disappearance of downward rigidity. This suggests that compensation transparency makes it harder for boards to deviate from stated bonus formulae and, if they do, the deviations are more informative.

大量文献发现，首席执行官的薪酬，尤其是奖金，表现出向下刚性。尽管公司董事会通常保留偏离其规定的奖金公式的酌处权。我们推测，在偶尔出现意外奖金削减的情况下，董事会很可能掌握着有关公司长期前景和首席执行官能力的不利私人信息。因此，我们假设意外的奖金削减将预示着公司未来的经营业绩以及首席执行官的被迫更替。我们首先验证了我们的私人信息前提，表明股票市场对首席执行官解雇或盈利公告的反应对于经历意外奖金削减的公司而言是平静的，但对于那些没有削减奖金的公司则不然。与这些预测一致，我们发现意外的奖金削减是随后业绩不佳（ROE）和较低的公司估值（托宾Q）以及首席执行官解雇的有力预测因素。此外，我们研究了 SK 法规 (2006) 的影响，并表明预测能力在 SK (2006) 法规之后变得更强。SK，随着向下刚性的消失。这表明薪酬透明度使董事会更难偏离既定的奖金公式，而且如果这样做，偏离的信息也更丰富。