Option-based compensation: a survey |
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Authors: | Rutger Muurling Thorsten Lehnert |
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Affiliation: | aFaculty of Economics and Business Administration, Maastricht University, P.O. Box 616, 6200 MD Maastricht, The Netherlands;bLimburg Institute of Financial Economics (LIFE), Maastricht University, P.O. Box 616, 6200 MD Maastricht, The Netherlands |
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Abstract: | Despite empirical research and theoretical validity, there is mixed evidence on whether employee stock options align interests between management and shareholders by turning managers into owners. What used to be a functional tool introduced in the 1950s, has gotten out of hand, as perceived by the press and popular literature. The main catalyst is the accounting treatment stock options receive. This paper provides an overview of the empirical research in the field and discusses the current accounting treatment of employee stock options and impending changes. We conclude by proposing alternative compensation tools. |
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Keywords: | Option-based compensation Management Shareholders |
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