This paper develops a model for the valuation of executive stock options (ESOs) considering two sources of early exercise: forced exercise due to executive turnover and voluntary exercise due to personal considerations. Using data of about 4,000 US executives, I estimate separate hazard rate...

In this paper I develop a theoretical model in which an executive exercises her option package (ESO) in fractions to diversify into other assets. I find that fractional exercises affect ESO values considerably for companies with highly volatile stock returns compared to a model with assumed full...