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

Vasiliki Athanasakou, Daniel Ferreira and Lisa Goh

No 12318, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: 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.

Keywords: CEO overconfidence; corporate investment; stock option grants (search for similar items in EconPapers)
JEL-codes: G30 G32 J33 M41 M52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn and nep-hrm
Date: 2017-09
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