Executive Turnover and the Valuation of Stock Options

2010 ◽  
Author(s):  
Daniel Klein
Keyword(s):  
Stock Options ◽  
Executive Turnover

Option repricing and executive retention – revisited

2016 ◽  
Vol 15 (4) ◽  
pp. 499-517
Author(s):  
Sandra Renfro Callaghan ◽  
Chandra Subramaniam ◽  
Stuart Youngblood
Keyword(s):  
Stock Price ◽  
Stock Options ◽  
Control Sample ◽  
Stock Option ◽  
Executive Turnover ◽  
Content Type ◽  
Executive Stock Option ◽  
Managerial Talent ◽  
Option Repricing ◽  
Stock Option Repricing

Purpose This paper aims to directly test the assertion by proponents of executive stock option repricing that repricing leads to increased management retention. Previous studies find either no effect or decreased retention following stock price repricing. This paper uses a more precise research design to re-examine the relationship between stock option retention and management retention. Design/methodology/approach The authors use an empirical methodology and construct a sample of 158 firms and 201 repricing events, and a control sample of 201 non-repricing firms. They then examine executive turnover in the four years following the stock option repricing event. Findings It was found that, consistent with agency theory, stock option repricing actually results in greater executive retention. Specifically, CEO retention is significantly greater for repricing firms relative to non-repricing firms for up to three years following the repricing date, and non-CEO executive retention is significantly greater for two years. Research limitations/implications Firms continue to restructure management through stock option repricing. However, recent option repricing has been undertaken during a period when the economy is in decline, making it is difficult to disentangle effects of option repricing on management retention. Hence, this paper uses repricing data from an earlier period, from 1992-1997, when the economy was good. Originality/value Many firms argue that when stock options are out-of-the-money and managerial talent is in demand, repricing executive stock options is necessary to retain managers. Previous studies find contradictory or no support for this view. Using a much more precise methodology, this paper shows that firms do retain managers when they reprice their options compared to when they do not.

Executive Turnover Following Option Backdating Allegations

2012 ◽  
Vol 88 (1) ◽  
pp. 75-105 ◽  
Author(s):  
Jap Efendi ◽  
Rebecca Files ◽  
Bo Ouyang ◽  
Edward P. Swanson
Keyword(s):  
Propensity Score ◽  
Executive Compensation ◽  
Stock Options ◽  
Matched Control ◽  
Data Availability ◽  
Executive Turnover ◽  
General Counsel ◽  
Turnover Rates ◽  
Forced Turnover ◽  
Control Firm

ABSTRACT: We find that the likelihood of forced turnover in the CEO and CFO positions is significantly higher for firms in the aftermath of option backdating than in propensity-score matched control firms. Forced turnover occurs in about 36 percent of the accused firms. The forced turnover rates for CEOs and CFOs are similar and several times higher than normal. The displaced managers are further punished by the managerial labor market, as they are much less likely than control firm managers to be rehired at comparable positions. We also find that backdating firms restructure CEO compensation to rely less on stock options. Finally, we learn the higher turnover extends to the General Counsel. While boards are often viewed as unresponsive to criticisms involving executive compensation, they did respond quite decisively to option backdating allegations and the accompanying adverse publicity. Data Availability: All data used in this study are publicly available from the sources indicated.

Stock Options als ein Instrument erfolgsorientierter Vergütung bei im NEMAX 50 notierten Unternehmen

Controlling ◽  
2002 ◽  
Vol 14 (12) ◽  
pp. 707-714
Author(s):  
Christian Krensel ◽  
Andreas Siemes ◽  
Sina Afra
Keyword(s):  
Stock Options
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