Altering the terms of executive stock options

• 成果类型: Article
• 署名作者: Brenner, M; Sundaram, RK; Yermack, D
• 署名单位: New York University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/S0304-405X(00)00052-0
• 发表日期: 2000
• 页码: 103-128
• 关键词: executive stock options; Executive compensation; resetting; repricing; valuation

摘要

We examine the practice of resetting the terms of previously-issued executive stock options. We identify properties of reset options, develop a model for valuing resettable options, and characterize the firms that have reset options. We find the vast majority of options are reset at-the-money, resulting, on average, in the strike price dropping 40%, Our valuation model suggests that resetting has only a small impact on the ex-ante value of an option award, but the ex-post gain can be substantial. Finally, we find resetting has a strong negative relation with firm performance even after correcting for industry performance. (C) 2000 Elsevier Science S.A. All rights reserved. JEL classification: G12; G13; G32.