Executive Stock Option Programs (SOPs) have become the dominant compensation instrument for top-management in recent years. The incentive effects of an SOP both with respect to corporate investment and financing decisions critically depend on the design of the SOP. A specific problem in...

This study experimentally investigates whether shareholders correctly anticipate the incentive effects of increasingly complex compensation packages given to managers, and whether potential biases in individual shareholder beliefs carry over to price and volume effects in a stock market. In the...

In this paper we examine CEO stock option contracts using UK data for fiscal year 1997. We show how the portfolio of options varies with firm wealth; describe the structure of the contract (in terms of vesting criteria related to performance targets), and illustrate whether the option...