Changes in CEO Stock Option Grants: A Look at the Numbers

Changes in CEO Stock Option Grants: A Look at the Numbers

Vasiliki Athanasakou, Daniel Ferreira, Lisa Goh

Series number :

Serial Number: 

Date posted :

June 01 2013

Last revised :

September 06 2018
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  • Corporate investment • 
  • stock options grants • 
  • Earnings management • 
  • CEO overconfidence

We study changes in the number of CEO stock option grants. Motivated by evidence of rigidity in stock option grants, we first provide a detailed description of the main aggregate trends in CEO stock option grants. We then consider the cross-sectional heterogeneity in option-granting activity and examine observable factors which may lead boards of directors to revise their option grants.

We find that CEOs of firms with unusual investment patterns subsequently receive fewer stock options as part of their compensation packages. CEOs who hold exercisable deeply-in-the-money options (overconfident CEOs) also receive fewer stock options in subsequent periods. Our results suggest that boards use evidence of high or low investment to learn about CEO preferences and traits. These insights can inform theoretical discussion on the topic of option granting behavior and, more broadly, on the board’s re-contracting process.


Real name:
Vasiliki Athanasakou
Real name:
Lisa Goh