Stock options and equity-based executive compensation: A long-term perspective

1990 ◽  
Vol 1 (4) ◽  
pp. 379-387
Author(s):  
Robert C. Galvin ◽  
Manuel A. Bernardo
2004 ◽  
Vol 16 (1) ◽  
pp. 57-92 ◽  
Author(s):  
Konstantinos Stathopoulos ◽  
Susanne Espenlaub ◽  
Martin Walker

This paper examines the executive compensation practices of listed U.K. retailing companies. We compare “New Economy” retailers (e-commerce/dot-coms) to more traditional retailers operating in the “Old Economy.” We also discriminate between recently floated retailers and their more seasoned counterparts. Using a sample of remuneration contracts for 549 directors in 72 listed U.K. companies in the New and Old Economies, we investigate the structure and level of executive (and nonexecutive) compensation defined as the sum of salary, annual bonus, and the values of executive stock options and long-term incentive plans (LTIPs). We investigate the extent to which the contract features are determined by firm characteristics, economic sector, and governance/ownership factors. In contrast to the U.S., where almost all executive stock options are issued at the money, there is a greater variety of practice in the U.K. with some options being granted substantially in the money. We therefore pay special attention to this U.K. institutional feature by producing a model designed to explain the crosssectional variation in the moneyness of stock options at the date of issue. We also examine the determinants of a number of other contract features. These are: the time to maturity of the executive stock options, the leverage of the compensation package, the ratio of long-term pay relative to short-term pay, and pay performance sensitivity. We find that differences in compensation arrangements can be explained to a significant extent by differences in firm size, growth/growth opportunities, firm financial policy, ownership characteristics, and governance arrangements. We also find some systematic differences between the compensation arrangements of CEOs and other executives.


1995 ◽  
Vol 10 (3) ◽  
pp. 655-676 ◽  
Author(s):  
John A. Brozovsky ◽  
Parvez R. Sopariwala

Executive compensation schemes are expected to reduce agency costs by aligning the interests of stockholders and managers. We attempt to determine the characteristics of companies that adopt long-term performance plans. Using a matched-pair design, we conduct a multivariate logit analysis that is weighted to take into account the choice-based nature of the sample. Our results suggest that performance plans may have been adopted to complement the inadequate compensation derived from stock options. In addition, we find that performance plans are more likely to be adopted by companies who have smaller investment opportunity sets and have older managers who are underinvesting in R&D expenditures.


2005 ◽  
Vol 40 (1) ◽  
pp. 135-160 ◽  
Author(s):  
Kathleen M. Kahle ◽  
Kuldeep Shastri

AbstractThis paper analyzes the relation between the capital structure of a firm and the tax benefits realized from the exercise of stock options. Theory suggests that firms with tax benefits from the exercise of stock options should carry less debt since tax benefits are a non-debt tax shield. We find that both long- and short-term debt ratios are negatively related to the size of tax benefits from option exercise. Moreover, one-year changes in long-term leverage are negatively related to changes in the number of options exercised. Such a relation does not exist for changes in short-term leverage. Finally, firms with option-related tax benefits tend to issue equity, with the net amount of equity issued an increasing function of these tax benefits.


Blood ◽  
2012 ◽  
Vol 120 (21) ◽  
pp. 1038-1038
Author(s):  
M. Judith Peterschmitt ◽  
Elena Lukina ◽  
Nora Watman ◽  
Marta Dragosky ◽  
Gregory M Pastores ◽  
...  

Abstract Abstract 1038 Introduction: In Gaucher disease type 1 (GD1), genetically caused deficiency of the enzyme acid β-glucosidase results in undegraded glucosylceramide to accumulate in tissue macrophages (Gaucher cells), resulting in multisystemic manifestations that include thrombocytopenia, anemia, hepatosplenomegaly, and bone disease. A variable clinical course and progression among patients have led to the development of therapeutic goals for the different disease manifestations (Pastores et al., Semin Hematol. 2004;41[suppl 5]:4–14). Eliglustat, a potent and specific inhibitor of glucosylceramide synthase, is under late-stage development as an oral substrate reduction therapy for GD1. Objective: To report long-term efficacy and safety results. Methods: This ongoing, open-label, uncontrolled, multicenter Phase 2 clinical trial enrolled 26 adult patients with GD1 who were not on treatment for the previous 12 months and who had splenomegaly with thrombocytopenia and/or anemia. Patients received 50 mg or 100 mg eliglustat twice daily depending on the plasma trough level. Efficacy outcomes were assessed periodically and included changes from baseline in hemoglobin, platelets, spleen and liver volumes, skeletal manifestations, disease-related biomarker levels, and achievement of therapeutic goals. Results: Nineteen patients completed 4 years of eliglustat treatment; no patient discontinued in the last 2 years. After 4 years of treatment, mean hemoglobin level and platelet count increased by 2.3±1.5 g/dL (from 11.3±1.5 g/dL to 13.6±1.2 g/dL) and 95% (from 68,700±21,200/mm3 to 125,400±51,100/mm3), respectively. Mean spleen and liver volumes (multiples of normal, MN) decreased by 63% (from 17.3±9.5 to 6.1±3.4 MN) and 28% (from 1.7±0.4 MN to 1.2±0.3 MN), respectively. All patients met at least 3 of 4 long-term therapeutic goals (spleen, 100% of patients; liver, 94%; hemoglobin, 100%; platelets, 50%). Baseline platelet count was not found to be a predictive factor of response to treatment. However, a strong linear, statistically significant correlation was found between the mean plasma trough level of eliglustat and the platelet response in patients after 4 years of treatment with eliglustat (r=0.731, P=0.0004). Median chitotriosidase and CCL-18 each decreased by 82%; plasma GL-1 and GM3 normalized. Mean lumbar spine bone mineral density increased by 0.7 Z-score (from −1.2±0.9 to −0.5±1.1) and by 0.8 T-score (from −1.6±1.1 to −0.88±1.3). The greatest increases in lumbar spine T-scores occurred in patients with osteoporosis at baseline. Femur dark marrow, which is believed to reflect Gaucher cell infiltration into bone marrow, was reduced or stable in 17/18 patients. There were no bone crises. Eliglustat was well-tolerated. Most adverse events (AEs) were mild and unrelated to treatment. Ten drug-related AEs, all mild, occurred in 8 patients. No new serious AEs were reported in any patient between 3 and 4 years of treatment. Discussion: Eliglustat continues to show promising efficacy and safety, with clinically meaningful improvements across several disease parameters. Results from two controlled Phase 3 studies in untreated and enzyme replacement therapy maintenance patients will be available in 2013. Disclosures: Peterschmitt: Genzyme: Employment. Lukina:Genzyme: Honoraria, Research Funding. Watman:Genzyme: Membership on an entity's Board of Directors or advisory committees. Pastores:Amicus: Research Funding; Actelion: Research Funding; Biomarin: Research Funding; Genzyme: Consultancy, Honoraria, Membership on an entity's Board of Directors or advisory committees, Research Funding; Shire HGT: Research Funding; Protalix: Research Funding. Arreguin:Genzyme: Research Funding. Rosenbaum:Pfizer: Study Investigator Other. Zimran:Protalix Biotherapeutics: Consultancy; Protalix Biotherapeutics: stock options, stock options Other; Protalix Biotherapeutics: Scientific Advisory Board, Scientific Advisory Board Other; Genzyme: Research Funding; Shire HGT: Honoraria; Actelion: Honoraria; Pfizer: Honoraria. Aguzzi:Genzyme: Employment. Ross:Genzyme: Employment. Puga:Genzyme: Employment.


2019 ◽  
Vol 57 (2) ◽  
pp. 181-200
Author(s):  
Ivana Marinović Matović

AbstractExecutive compensations have a strong motivation role in contemporary business organizations. Adequate models of compensation enable attracting and retaining the high-capacity managers. This way, business organization conquers and maintains the competitive position in the context of globalization. It is necessary to align the executive compensation with the business organization’s strategy, which requires careful process of planning, done by the highest levels of management and ownership. The main objective of the paper is to explore and compare the structure and the level of executive compensation in the Republic of Serbia and EU countries. The paper focuses on executive compensation components, primarily long-term and short-term incentives, as well as sallary and benefits. A comparative analysis of executive compensation models was performed to explain the differences in the observed countries.The study found large and disproportionate differences in the executive compensation levels, conditioned mostly by the economic development of the observed economies.


2011 ◽  
Vol 9 (1) ◽  
pp. 136-155
Author(s):  
Jean M. Canil ◽  
Bruce A. Rosser

Using a unique data set, we test theoretical propositions relating to grant size and exercise price in determination of optimal executive compensation. For Hall and Murphy, pay-performance sensitivity does not behave as predicted with respect to CEO risk aversion and diversification, but the latter supports observed grant size while ATM grants exhibit positive abnormal returns as predicted. Consistent with Choe, exercise price is found inversely related to leverage. The unexpected positive relation between grant size and stock volatility is conjectured driven by CEOs’ influencing large grants, which are found associated with weak corporate governance but ameliorated by outside directors.


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