You can't take it with you: Sunset provisions for equity compensation when managers retire, resign, or die

Sandeep Dahiya and David Yermack

Journal of Corporate Finance, 2008, vol. 14, issue 5, 499-511

Abstract: Company stock option plans have diverse "sunset" policies for modifying terms of options held by managers who exit the firm. In our S&P 500 sample, these forfeiture, vesting, and expiration provisions are less generous in companies characterized by fast growth, dependence on skilled human capital, and high strategic interaction with competitors. While these results apply for workers who retire at the end of their careers, almost no variation exists in the treatment of workers who resign with the possibility of working elsewhere. For CEOs over age 60, companies' sunset rules imply large discounts to option award values and estimates of total compensation.

Keywords: Executive; stock; options; Vesting; Forfeiture (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (16)

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