Abstract

http://ssrn.com/abstract=917062
 
 

References (39)



 
 

Citations (5)



 


 



Incentive Effects of Performance-Vested Stock Options


Yu Flora Kuang


The University of Melbourne

Jeroen Suijs


Tilburg University - Tilburg School of Economics and Management

July 13, 2006


Abstract:     
This paper assesses the incentive effects of stock options that link vesting to firm performance. It is shown that performance-vested stock options induce higher managerial effort than traditional stock options (i.e. stock options that vest unconditionally) when performance targets are not too difficult. Furthermore, the principal is strictly better off when using performance-vested stock options. When performance targets reside at the optimal level, analysis indicates an above 70% vesting probability, echoing the consensus in the goal-setting literature that states that tight, but achievable targets are associated with performance benefits.

Number of Pages in PDF File: 39

JEL Classification: J33, G34


Open PDF in Browser Download This Paper

Date posted: July 17, 2006 ; Last revised: September 25, 2011

Suggested Citation

Kuang, Yu Flora and Suijs, Jeroen, Incentive Effects of Performance-Vested Stock Options (July 13, 2006). Available at SSRN: http://ssrn.com/abstract=917062 or http://dx.doi.org/10.2139/ssrn.917062

Contact Information

Yu Kuang
The University of Melbourne ( email )
Level 7, The Spot
198 Berkeley St
Carlton, Victoria 3053
Australia
+61383449361 (Phone)
+61393492397 (Fax)
Jeroen Suijs (Contact Author)
Tilburg University - Tilburg School of Economics and Management ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
Feedback to SSRN


Paper statistics
Abstract Views: 607
Downloads: 186
Download Rank: 41,790
References:  39
Citations:  5

© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.281 seconds