Stock option grants to target CEOs during private merger negotiations

• 成果类型: Article
• 署名作者: Fich, Eliezer M.; Cai, Jie; Tran, Anh L.
• 署名单位: Drexel University; City St Georges, University of London
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2011.03.010
• 发表日期: 2011
• 页码: 413-430
• 关键词: Merger negotiations; Stock options; Takeover premium

摘要

Unscheduled stock options to target chief executive officers (CEOs) are a nontrivial phenomenon during private merger negotiations. In 920 acquisition bids during 1999-2007. over 13% of targets grant them. These options substitute for golden parachutes and compensate target CEOs for the benefits they forfeit because of the merger. Targets granting unscheduled options are more likely to be acquired but they earn lower premiums. Consequently, deal value drops by $62 for every dollar target CEOs receive from unscheduled options. Conversely, acquirers of targets offering these awards experience higher returns. Therefore, deals involving unscheduled grants exhibit a transfer of wealth from target shareholders to bidder shareholders. (C) 2011 Elsevier B.V. All rights reserved.