RESOLVING CORPORATE GOVERNANCE PROBLEMS IN EXECUTIVE STOCK OPTION GRANTS

Paul Dawson

A chapter in Corporate Governance, 2004, pp 247-263 from Emerald Group Publishing Limited

Abstract: Executive stock option grants are intended to remove corporate governance problems by aligning the managers’ interests with those of the outside shareholders. Conventional schemes leave several problems in place. Exotic option structures can resolve these. In this paper, such structures are proposed and tested on the Dow Jones constituents over a 10-year period. These alternative schemes increase the financial rewards to the better performing managers, at no extra cost to the company whilst offering a resolution or mitigation of the identified agency problems No one scheme dominates the others and a portfolio of option types is indicated.

Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:eme:afeczz:s1569-3732(04)09010-3

DOI: 10.1016/S1569-3732(04)09010-3

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