We study how friendly boards design the structure of optimal compensation contracts in favor of powerful CEOs. Our study yields unexpected results. First, powerful managers receive higher pay and a contract with a higher pay-performance sensitivity (PPS) if firm performance is low and vice...

This paper examines the decision to exercise employee stock options (ESOs). Our results indicate a positive relation between the extent of quot;earlyquot; exercise and the unhedged risk of the option. Specifically we document a positive relation between the variance of ESO returns and the extent...

This paper examines the decision to exercise employee stock options (ESOs). Our results indicate a positive relation between the extent of quot;earlyquot; exercise and the unhedged risk of the option. Specifically we document a positive relation between the variance of ESO returns and the extent...