The Retention Effects of Unvested Equity: Evidence from Accelerated Option Vesting

• 成果类型: Article
• 署名作者: Jochem, Torsten; Ladika, Tomislav; Sautner, Zacharias
• 署名单位: University of Amsterdam; Frankfurt School Finance & Management
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhy017
• 发表日期: 2018
• 页码: 4142
• 关键词: EMPLOYEE STOCK-OPTIONS; ceo turnover; incentives; COMPENSATION; DIRECTORS; MARKET; target; grants; FIRMS; price

摘要

We document that firms can effectively retain executives by granting deferred equity pay. We show this by analyzing a unique regulatory change (FAS 123-R) that prompted 723 firms to suddenly eliminate stock option vesting periods. This allowed CEOs to keep 33% more options when departing the firm, and we find that voluntary CEO departure rates subsequently rose from 5% to 21%. Our identification strategy exploits FAS 123-R's almost-random timing, which was staggered by firms' fiscal year-ends. Firms that experienced departures suffered negative stock price reactions, and responded by increasing compensation for remaining and newly hired executives.