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CEO Stock‐Based Compensation: An Empirical Analysis of Incentive‐Intensity, Relative Mix, and Economic Determinants*
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Abstract(back to top)
The use of stock‐based compensation for U.S. CEOs has increased significantly throughout the 1990s. Research interest, in particular on stock option compensation, has similarly increased, yet contradictory results create questions about the theoretical underpinnings. Therefore, we revisit the controversy surrounding stock option awards, and we further the understanding of restricted stock grants, which have escaped similar research focus. Using a recent data set, we obtain convincing empirical support for most theoretical predictions about stock option awards. We also find that restricted stock, due to its linear payoffs, is relatively inefficient in inducing risk‐averse CEOs to accept risky, value‐increasing investment projects.
Bibliographic Information(back to top)
- CEO Stock‐Based Compensation: An Empirical Analysis of Incentive‐Intensity, Relative Mix, and Economic Determinants
- Stephen Bryan, LeeSeok Hwang and Steven Lilien
- The Journal of Business
- Vol. 73, No. 4 (October 2000) (pp. 661-693)
Notes and References(back to top)
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Notes
* We gratefully acknowledge the helpful comments of Sudipta Basu; William Greene; Joseph Kerstein; S. P. Kothari; Steven Lustgarten; Joseph Weintrop; David Yermack; seminar participants at Baruch College, Rutgers University, and SUNY Buffalo; and an anonymous reviewer. We also thank John Graham for the data on marginal tax rates. We acknowledge in memoriam the helpful comments of Vic Pastena.
Items Citing this Item (back to top)
6 item(s) in JSTOR cite this item
- Swaminathan KalpathyVol. 44, No. 6 (Dec., 2009) pp. 1459-1487Stable URL: http://www.jstor.org/stable/40505954
- Rangarajan K. Sundaram, David L. YermackVol. 62, No. 4 (Aug., 2007) pp. 1551-1588Stable URL: http://www.jstor.org/stable/4622311
- Sok‐Hyon Kang, Praveen Kumar, and Hyunkoo LeeVol. 79, No. 3 (May 2006) pp. 1127-1147Stable URL: http://www.jstor.org/stable/10.1086/500671
- Jean McGuire, Elie MattaVol. 46, No. 2 (Apr., 2003) pp. 255-265Stable URL: http://www.jstor.org/stable/30040618
- Dan R. Dalton, Catherine M. Daily, S. Trevis Certo, Rungpen RoengpityaVol. 46, No. 1 (Feb., 2003) pp. 13-26Stable URL: http://www.jstor.org/stable/30040673
- John E. Core, Wayne R. Guay, S. P. KothariVol. 77, No. 3 (Jul., 2002) pp. 627-652Stable URL: http://www.jstor.org/stable/3068890