Stock option plans for non-executive employees
There are 3 versions of this paper. We examine the determinants of options outstanding, grants, and exercises by non-executive employees. Using hand-collected data on options outstanding, grants, and exercises for a broad cross-section of large firms for the years towe create measures of option values and incentives for both executive top 5 employees and non-executive employees.
We find that firms have committed large fractions of firm value to option plans, that a majority of these options are distributed to non-executives, and that substantial cross-sectional variation exists with respect to the fraction of the option plan that is distributed to non-executives. We provide strong evidence that firms use options to a greater extent when they face capital requirements and financing constraints. This finding is consistent with cash constrained firms using stock option compensation in lieu of cash compensation.
Our empirical results are also broadly consistent with the hypothesis that options held by non-executives vary as predicted by theory relating the distribution of equity incentives to firm characteristics. However, we find little evidence that firms manage the level of option plan incentives through the annual grant of options, suggesting that the corporate use of non-executive option plans is still evolving.
In our cross-sectional regressions of annual exercises, we find strong evidence that the psychological reference point bias documented by Heath, Huddart, and Lang is valid in a broad sample of large corporations. The Wharton School, University of Pennsylvania Research Papers Series.
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Stock option plans for non-executive employees
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This page was processed by apollo3 in 0. Your Account User Home Personal Info Affiliations Cp money maker 2.0 free download My Papers My Briefcase Sign out. Download this Paper Open PDF in Browser Share: Using the URL or DOI link below will ensure access to this page stock option plans for non-executive employees. Core Massachusetts Institute of Technology MIT - Sloan School of Management Wayne R.
Guay University of Pennsylvania - Accounting Department.
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Abstract We examine the determinants of options outstanding, grants, and exercises by non-executive employees.
Core Contact Author Massachusetts Institute of Technology MIT - Sloan School of Management email 77 Massachusetts Ave.
E Cambridge, MA United States. Guay University of Pennsylvania - Accounting Department email Locust Walk Steinberg-Dietrich Hall Philadelphia, PA United States Phone Fax.
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