Exercises of Executive Stock Options on the Vesting Date

Xudong Fu and James A. Ligon

Financial Management, 2010, vol. 39, issue 3, 1097-1126

Abstract: We investigate the motives for executives to exercise executive stock options on the options’ vesting date versus a later early exercise. We find that executives frequently exercise on the vesting date, executives with a greater need for portfolio diversification and riskier underlying stocks are more likely to exercise their options on the vesting date versus a later early exercise, and private information appears less relevant to vesting date exercises.

Date: 2010
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