Arbeitspapier
Stock options and chief executive officer compensation
Although stock options are commonly observed in chief executive o±cer (CEO) compensation contracts, there is theoretical controversy about whether stock options are part of the optimal contract. Using a sample of Fortune 500 companies, we solve an agency model calibrated to the company-specific data and we find that stock options are almost always part of the optimal contract. This result is robust to alternative assumptions about the level of CEO risk-aversion and the disutility associated with their effort. In a supplementary analysis, we solve for the optimal contract when there are no restrictions on the contract space. We find that the optimal contract (which is characterized as a state-contingent payoff to the CEO) typically has option-like features over the most probable range of outcomes.
- Sprache
-
Englisch
- Erschienen in
-
Series: Discussion Paper ; No. 1447
- Klassifikation
-
Wirtschaft
Optimization Techniques; Programming Models; Dynamic Analysis
Asymmetric and Private Information; Mechanism Design
Economics of Contract: Theory
Compensation Packages; Payment Methods
Labor Contracts
- Thema
-
Stock options
incentives
agency model
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Armstrong, Christopher S.
Larcker, David F.
Su, Che-Lin
- Ereignis
-
Veröffentlichung
- (wer)
-
Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
- (wo)
-
Evanston, IL
- (wann)
-
2007
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:41 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Armstrong, Christopher S.
- Larcker, David F.
- Su, Che-Lin
- Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
Entstanden
- 2007
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