publication . Article . 2009

Stock Option Compensation and Managerial Turnover

Raluca Georgiana NASTASESCU;
Open Access
  • Published: 01 Jan 2009 Journal: REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, volume 10, issue 2 May, pages 352-366
Abstract
This study examines the association between managerial turnover and equity-based compensation. I investigate whether stock options act to bond executives to their firms and whether retention of managers is a motivation of companies in designing CEO incentive contracts. The results show that stock options do negatively influence the probability of a CEO leaving the company. The monetary cost of losing the value of equity-based compensation package keeps the manager with his company. I also find that in deciding upon a CEO's compensation scheme, firms take into account the probability of a CEO resigning from the company in the next period and award more stock opti...
Subjects
ACM Computing Classification System: ComputingMilieux_THECOMPUTINGPROFESSION
free text keywords: managerial retention; executive compensation; stock options; turnover; ownership., jel:J63, jel:R53

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