Lucky CEOs / Lucian A. Bebchuk, Yaniv Grinstein, Urs Peyer.

Format:

Book

Author/Creator:

Bebchuk, Lucian A.

Contributor:

National Bureau of Economic Research.

Grinstein, Yaniv.

Peyer, Urs.

Series:

Working Paper Series (National Bureau of Economic Research) no. w12771.

NBER working paper series no. w12771

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2006.

Summary:

We study the relation between corporate governance and opportunistic timing of CEO option grants via backdating or otherwise. Our methodology focuses on how grant date prices rank within the price distribution of the grant month. During 1996-2005, about 12% of firms provided one or more lucky grant -- defined as grants given at the lowest price of the month -- due to opportunistic timing. Lucky grants were more likely when the board did not have a majority of independent directors and/or the CEO had longer tenure -- factors associated with increased influence of the CEO on pay-setting. We find no evidence that gains from manipulated grants served as a substitute for compensation paid through other sources; total reported compensation from such sources was higher in firms providing lucky grants. Finally, opportunistic timing has been widespread throughout the economy, with a significant presence in each of the economy's twelve (Fama-French) industries.

Notes:

Print version record

December 2006.