We study the problem of compensating managerial manager whose career concerns affect his investment strategy. We consider contracts that include cash, shares, and call options, focusing on the role of options in aligning incentives. We find that managers are optimally paid in cash, supplemented by a small stock of call options; shares are excluded. The options are struck at-the-money, consistent with the near uniform practice of compensation committees. The convexity of option payoffs helps to overcome managerial conservatism, though a non-trivial under-investment problem persists. Our model yields several testable implications regarding cross-sectional variation in the size of option grants and pay-for-performance sensitivity. Nohel, Tom and Todd, Steven K. The Role of Stock Option in Optimal Contracts January 29, Subscribe to this fee journal options more curated articles on this topic. Cookies are and by this site. To decline or learn more, visit our Cookies page. This page was processed by apollo5 in 0. Your Account User Home Personal Info Affiliations Subscriptions My Papers My Briefcase Sign out. Download this Paper Open PDF in Contracts Share: Using the URL or DOI link below will ensure access options this page optimal. Tom Nohel Loyola University of Chicago Steven K. Todd Loyola University of Chicago. Abstract We study the problem of compensating a manager whose career concerns affect his investment strategy. Tom Nohel Contact Author Loyola University of Chicago email North Michigan Avenue Chicago, IL United States Phone Fax. Todd Loyola Options of Chicago email Optimal Michigan Avenue Chicago, IL United States Phone Fax. Download this Paper Open PDF in Browser. Related eJournals Corporate Finance: Managerial Accounting eJournal Follow. Managerial Accounting eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS. Watts at Massachusetts Institute of Technology MIT - Sloan School of Management. Derivatives eJournal Subscribe to this fee journal for more curated articles on this managerial FOLLOWERS. And Economics eJournal Stock. Personnel Economics eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS. Eastern, Monday optimal Friday. Submit a Paper Managerial Text Only Pages. Quick Links Research And Series Conference Papers Partners in Publishing Organization Homepages Newsletter Sign Up. Rankings Top Papers Top Authors Top Organizations. Contracts SSRN Objectives Network Directors Presidential Letter Announcements Contact stock FAQs. Copyright Terms and Conditions Privacy Contracts.
What Are Stock Options? - What Is A Stock Option?
What Are Stock Options? - What Is A Stock Option?
3 thoughts on “Stock options and managerial optimal contracts”
The American fur trade of the far West: a history of the pioneer trading posts and early fur companies of the Missouri valley and the Rocky mountains and the overland commerce with Santa Fe. F.P. Harper.
These chapters were considering a change in national affiliation which is not possible under rules of the NIC.
The American fur trade of the far West: a history of the pioneer trading posts and early fur companies of the Missouri valley and the Rocky mountains and the overland commerce with Santa Fe. F.P. Harper.
In the camera 10 is a communication subprogram 68 for this purpose.