Changes in CEO Stock Option Grants: A Look at the Numbers

64 Pages Posted: 4 May 2013 Last revised: 14 Jun 2022

See all articles by Vasiliki E. Athanasakou

Vasiliki E. Athanasakou

Saint Mary's University, Canada - Sobey School of Business

Daniel Ferreira

London School of Economics - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Lisa Goh

Hang Seng University of Hong Kong - Department of Accountancy

Multiple version iconThere are 2 versions of this paper

Date Written: March 31, 2022

Abstract

We study changes in the number of CEO stock option grants. Despite some evidence of short-term rigidity, the number of options granted changes frequently over time. CEOs of firms with unusual investment patterns subsequently receive fewer stock options as part of their compensation packages. CEOs who hold exercisable deeply-in-the-money options (overconfident CEOs) also receive fewer stock options in subsequent periods. Our results show that past CEO behavior predicts stock option grants. These insights can inform theoretical discussion on option-granting behavior and, more broadly, on the board’s re-contracting process.

Keywords: stock option grants, corporate investment, CEO overconfidence

JEL Classification: G30, G32, J33, M41, M52

Suggested Citation

Athanasakou, Vasiliki E. and Ferreira, Daniel and Goh, Lisa, Changes in CEO Stock Option Grants: A Look at the Numbers (March 31, 2022). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 360/2013, Journal of Corporate Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2260414 or http://dx.doi.org/10.2139/ssrn.2260414

Vasiliki E. Athanasakou

Saint Mary's University, Canada - Sobey School of Business ( email )

Sobey Building 311
923 Robie Street
Halifax, Nova Scotia B3H 3C3
Canada

Daniel Ferreira (Contact Author)

London School of Economics - Department of Finance ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
(+44) 20 7955 7544 (Phone)

HOME PAGE: http://personal.lse.ac.uk/FERREIRD/

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Lisa Goh

Hang Seng University of Hong Kong - Department of Accountancy ( email )

Hang Shin Link
Siu Lek Yuen
Shatin, Hong Kong
China

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