DP12318 Changes in CEO Stock Option Grants: A Look at the Numbers
|Author(s):||Vasiliki Athanasakou, Daniel Ferreira, Lisa Goh|
|Publication Date:||September 2017|
|Keyword(s):||CEO overconfidence, corporate investment, stock option grants|
|JEL(s):||G30, G32, J33, M41, M52|
|Programme Areas:||Financial Economics|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12318|
We study changes in CEO stock option grants. Unlike most of the literature, we focus on the number rather than the value of options granted. We first provide a detailed description of the main aggregate trends in CEO stock option grants. We then consider the cross-sectional heterogeneity in option-granting activity. We find that CEOs who either overinvest or underinvest subsequently receive fewer stock options as part of their compensation packages. CEOs who hold exercisable deeply-in-the-money options (overconfident CEOs) also receive fewer stock options in subsequent periods. Our findings provide insights into the dynamics of CEO compensation contracts.