Executive Stock Option Repricing, Internal Governance Mechanisms, and Management Turnover

2000 ◽  
Author(s):  
N. K. Chidambaran ◽  
Nagpurnanand R. Prabhala
Keyword(s):  
Stock Option ◽  
Governance Mechanisms ◽  
Management Turnover ◽  
Internal Governance ◽  
Executive Stock Option ◽  
Internal Governance Mechanisms ◽  
Option Repricing ◽  
Stock Option Repricing

Stock Option Repricing and Its Alternatives: An Empirical Examination

2009 ◽  
Vol 44 (6) ◽  
pp. 1459-1487 ◽  
Author(s):  
Swaminathan Kalpathy
Keyword(s):  
Human Capital ◽  
Stock Price ◽  
Conflicts Of Interest ◽  
Multinomial Logit ◽  
Agency Cost ◽  
Stock Option ◽  
Empirical Examination ◽  
Internal Governance ◽  
Option Repricing ◽  
Stock Option Repricing

AbstractIn this paper I examine the likelihood of CEO stock option repricing and its alternatives: namely, option grant, stock grant, and “do nothing.” Multinomial logit results suggest that firms reprice options to increase sensitivity of pay to stock price and to temper down sensitivity of pay to volatility. Moreover, repricing firms are younger and more concentrated in industries where human capital is important. Finally, I find no evidence that internal governance or executive conflicts of interest are relevant in explaining repricing. My results indicate that repricing is motivated by incentive alignment and retention, and not by agency cost considerations.

An examination of executive stock option repricing

2001 ◽  
Vol 61 (2) ◽  
pp. 207-225 ◽  
Author(s):  
M Carter
Keyword(s):  
Stock Option ◽  
Executive Stock Option ◽  
Option Repricing ◽  
Stock Option Repricing

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 Stock Option Repricing: The Cost to Firms and Value to Executives

2008 ◽  
Author(s):  
N.K. Chidambaran ◽  
Nagpurnanand R. Prabhala
Keyword(s):  
Stock Option ◽  
Executive Stock Option ◽  
The Cost ◽  
Option Repricing ◽  
Stock Option Repricing

Executive Stock Option Repricing: Retention and Performance Reconsidered

2002 ◽  
Vol 44 (4) ◽  
pp. 8-23 ◽  
Author(s):  
Catherine M. Daily ◽  
S. Trevis Certo ◽  
Dan R. Dalton
Keyword(s):  
Stock Option ◽  
Executive Stock Option ◽  
And Performance ◽  
Option Repricing ◽  
Stock Option Repricing

Is executive stock option repricing a red flag?

2005 ◽  
Vol 16 (6) ◽  
pp. 61-69
Author(s):  
Evelyn C. Hume ◽  
Damir Tokic
Keyword(s):  
Stock Option ◽  
Executive Stock Option ◽  
Red Flag ◽  
Option Repricing ◽  
Stock Option Repricing
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