The 'repricing' of executive stock options

• 成果类型: Article
• 署名作者: Chance, DM; Kumar, R; Todd, RB
• 署名单位: Virginia Polytechnic Institute & State University; Boston University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/S0304-405X(00)00053-2
• 发表日期: 2000
• 页码: 129-154
• 关键词: executive; OPTION; incentives; repricing

摘要

We examine a sample of firms that reset the exercise prices on their executive options. These repricings follow a period of about one year of poor firm-specific performance in which the average firm loses one-fourth of its value. No other offsetting changes to option terms or compensation are made, and many firms reprice more than once. Without repricing, a majority of the options would have been at-the-money within two years. We find that when faced with circumstances in which repricing might be chosen, firms with greater agency problems, smaller size, and insider- dominated boards are more likely to reprice. (C) 2000 Elsevier Science S.A. All rights reserved. JEL classification: G30; G32; J33.