CEO Stock-Based Compensation: An Empirical Analysis of Incentive-Intensity, Relative Mix, and Economic Determinants

65 Pages Posted: 14 Oct 1999

See all articles by Stephen H. Bryan

Stephen H. Bryan

Wake Forest University

Lee-Seok Hwang

Seoul National University - College of Business Administration

Steven B. Lilien

City University of New York - Stan Ross Department of Accountancy

Multiple version iconThere are 2 versions of this paper

Abstract

The use of stock-based compensation for U.S. CEOs has increased significantly throughout the 1990s. Research interest, in particular on stock option compensation, has similarly increased, yet contradictory results create questions about the theoretical underpinnings. Therefore, we revisit the controversy surrounding stock option awards, and we further the understanding of restricted stock grants, which have escaped similar research focus.

Using a recent data set, we obtain convincing empirical support for most theoretical predictions about stock option awards. We also find that restricted stock, due to its linear payoffs, are relatively inefficient in inducing risk-averse CEOs to accept risky, value-increasing investment projects.

JEL Classification: J33, D82, D23

Suggested Citation

Bryan, Stephen H. and Hwang, Lee-Seok and Lilien, Steven B., CEO Stock-Based Compensation: An Empirical Analysis of Incentive-Intensity, Relative Mix, and Economic Determinants. Available at SSRN: https://ssrn.com/abstract=177490 or http://dx.doi.org/10.2139/ssrn.177490

Stephen H. Bryan (Contact Author)

Wake Forest University ( email )

7659 Reynolda Station
Winston-Salem, NC 27106
United States
336-758-3671 (Phone)

Lee-Seok Hwang

Seoul National University - College of Business Administration ( email )

Seoul, 151-742
Korea, Republic of (South Korea)

Steven B. Lilien

City University of New York - Stan Ross Department of Accountancy ( email )

One Bernard Baruch Way, Box B12-225
New York, NY 10010
United States
646-312-3163 (Phone)
646-312-3161 (Fax)

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