Stock Option Repricing and its Alternatives: an Empirical Examination

46 Pages Posted: 28 Dec 2005

See all articles by Swaminathan L. Kalpathy

Swaminathan L. Kalpathy

Texas Christian University - M.J. Neeley School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: February 2007

Abstract

Studies on determinants of stock option repricing contrast repricers with firms that do not conduct repricings. In practice, firms resort to other alternatives to retain managers and to restore incentives. We examine a broad array of alternatives that includes repricings, stock option grants, restricted stock grants, and the neutral alternative of doing nothing. Multinomial logit results suggest that firms reprice CEO stock options in response to economic factors. We address the debate on whether agency conflicts between managers and shareholders are severe in repricing firms, and do not find evidence that repricers are characterized by weak boards or entrenched managers.

Keywords: Stock Option, Repricing, Executive Compensation

JEL Classification: G30, J33, M52

Suggested Citation

Kalpathy, Swaminathan L., Stock Option Repricing and its Alternatives: an Empirical Examination (February 2007). Available at SSRN: https://ssrn.com/abstract=872332 or http://dx.doi.org/10.2139/ssrn.872332

Swaminathan L. Kalpathy (Contact Author)

Texas Christian University - M.J. Neeley School of Business ( email )

Fort Worth, TX 76129
United States