We examine how insider entrenching governance choices of firms conducting their initial public offering (IPOs) influence the CEOs compensation contracts post-IPO. Using ten legal provisions affecting insider entrenchment, we find that entrenching governance decisions have a significant effect on CEO compensation post-IPO. Specifically, we observe a positive association between entrenchment and levels of post-IPO salary, total compensation, and pay-for-performance sensitivity. We also find a negative relation between entrenchment and the proportion of CEOs' salary to total compensation. Our observed relationships are principally driven by takeover readiness provision choices rather than voting rights limitation choices. Our results are robust to controlling for potential confounding effects.
JEL Classifications: M41; M52; G34; G32.