Faculty Digital Archive

Archive@NYU >
Stern School of Business >
NYU Pollack Center for Law & Business Working Papers >

Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/25987

Title: You Can't Take It With You: Sunset Provisions for Equity Compensation When Managers Retire, Resign, or Die
Authors: Dahiyaa, Sandeep
Yermack, David
Issue Date: Sep-2006
Series/Report no.: CLB-06-014
Abstract: Company stock option plans have diverse “sunset” policies for modifying terms of options held by managers who exit the firm. In our S&P 500 sample, these forfeiture, vesting, and expiration provisions are less generous in companies characterized by fast growth, dependence on skilled human capital, and high strategic interaction with competitors. We show that these features of firms’ option plans directly impact management turnover, early exercise of stock options, and the availability of data about early exercises. For CEOs over age 60, companies’ sunset rules generally imply large discounts to option award values and estimates of total compensation. The authors appreciate helpful comments from Manuel Ammann, Patrick Bolton, Jennifer Carpenter, Don Chance, Stephen Choi, John Core, Joan Heminway, Tracie Woidtke, and seminar participants at Georgetown University, Mannheim University, University of St.Gallen, University of Tennessee, and the Gerzensee European Summer Symposium in Financial Markets.
URI: http://hdl.handle.net/2451/25987
Appears in Collections:NYU Pollack Center for Law & Business Working Papers

Files in This Item:

File Description SizeFormat
06-014.pdf203.17 kBAdobe PDFView/Open

Items in Faculty Digital Archive are protected by copyright, with all rights reserved, unless otherwise indicated.


The contents of the FDA may be subject to copyright, be offered under a Creative Commons license, or be in the public domain.
Please check items for rights statements. For information about NYU’s copyright policy, see http://www.nyu.edu/footer/copyright-and-fair-use.html 
Valid XHTML 1.0 | CSS