Executive Stock Option Vesting Conditions, Corporate Governance and CEO Attributes: Evidence from Australia

31 Pages Posted: 25 Jun 2018

See all articles by Xin Qu

Xin Qu

Griffith University - Department of Accounting, Finance and Economics

Majella Percy

Griffith University

Jenny Stewart

Griffith University - Griffith Business School

Fang Hu

Griffith University - The Department of Accounting, Finance & Economics

Date Written: June 2018

Abstract

We investigate the association between executive stock option (ESO) vesting conditions, corporate governance and CEO attributes. Using observations from the 250 largest Australian firms, we find that stronger corporate governance is positively associated with the length of the vesting period and the use of performance hurdles. We also find that when CEOs approach retirement, firms are more likely to grant longer time‐vesting options but are less likely to impose performance hurdles. Further, more powerful CEOs appear to influence the granting of ESOs with less restrictive vesting conditions. Our findings suggest that both corporate governance and CEO attributes significantly shape the design of ESOs.

Keywords: Executive stock options, Vesting conditions, Corporate governance, CEO attributes

Suggested Citation

Qu, Xin and Percy, Majella and Stewart, Jenny and Hu, Fang, Executive Stock Option Vesting Conditions, Corporate Governance and CEO Attributes: Evidence from Australia (June 2018). Accounting & Finance, Vol. 58, Issue 2, pp. 503-533, 2018, Available at SSRN: https://ssrn.com/abstract=3201376 or http://dx.doi.org/10.1111/acfi.12223

Xin Qu (Contact Author)

Griffith University - Department of Accounting, Finance and Economics ( email )

PMB 50
Gold Coast Queensland 9726
Australia

Majella Percy

Griffith University ( email )

170 Kessels Road
Nathan, Queensland QLD 4111
Australia

Jenny Stewart

Griffith University - Griffith Business School ( email )

Brisbane, Queensland 4111
Australia

Fang Hu

Griffith University - The Department of Accounting, Finance & Economics ( email )

Nathan Queensland 4111
Australia
+61 7 3735 7559 (Phone)
+61 7 3735 3719 (Fax)

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