Discussion paper

DP12318 Changes in CEO Stock Option Grants: A Look at the Numbers

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.

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Citation

Ferreira, D (2017), ‘DP12318 Changes in CEO Stock Option Grants: A Look at the Numbers‘, CEPR Discussion Paper No. 12318. CEPR Press, Paris & London. https://cepr.org/publications/dp12318