-
Journal menu
- General information
- Editorial Board and External Reviewers
- Journal Policies
- Publication Ethics and Malpractice Statement
- Instructions for authors
- Paper reviewing
- Article processing charge
- Feedback from stakeholders
- Journal’s Open Access statement
- Order hard copies of the journal
- 50 most cited papers in the journal
EVIDENCE THAT STOCK OPTIONS WORK FOR CEOS – BUT NOT FOR INCENTIVE REASONS
Download This Article
Bruce A. Rosser, Jean M. Canil 
Abstract
We document the first evidence of a structure of timing returns, award discounts/premia and CEO dilution costs relative to shareholders set at award and before the CEO invests marginal effort. All three factors affect CEOs’ effective exercise price and hence incentive to expend marginal effort. Exercised options, which exhibit the highest CEO and shareholder returns, are characterized by CEO acceptance of high dilution cost and high sensitivity to award premiums. CEO and shareholder returns for lapsed options and annual/biannual awards show high dependency on the dilution cost factor. Irregular awards are characterized by active pre-effort positioning by shareholders to reduce CEO opportunism.
Keywords: Executive Compensation, CEO Performance, Stock Option Awards, Discounted Options, Award Timing
How to cite this paper: Rosser, B. A. & Canil, J. M. (2009). Evidence that stock options work for CEOS – but not for incentive reasons. Corporate Ownership & Control, 7(2), 30-49. https://doi.org/10.22495/cocv7i2p3
