Employee Stock Option Compensation: A behavioral finance approach by Florian WolffEmployee Stock Option Compensation: A behavioral finance approach by Florian Wolff

Employee Stock Option Compensation: A behavioral finance approach

byFlorian Wolff

Paperback | December 10, 2004

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Over the last years stock options have become an integral part of the compensation of senior managers in Germany: Originating in the USA in the 1950s, this form of compensation gained increasing popularity among German corporations during the 1990s, so that by today far over 100 German listed companies grant stock option plans to their employees. Based on recent research the average German CEO ("Vor­ standsvorsitzender") receives approximately 10% of his salary in form of stock op­ tions. The ongoing globalisations of business practises as well as the boom of the Neuer Markt have been key drivers of this development. Initially, from an economic perspective the increasing importance of stock option plans in the compensation of senior managers has to be welcomed: Assuming that senior managers through their actions have the ability to influence the stock price of their companies, stock options represent a performance based type of pay that im­ proves the incentives to senior managers to create additional shareholder value. However, this perspective often neglects the potential costs created by such an in­ centive instrument. Several research studies suggest that companies in some cases generate additional costs through the granting of stock options that can exceed the benefits created by their incentive effect.
Dr. Florian Wolff promovierte bei Prof. Dr. Peter-J. Jost am Lehrstuhl für Organisationstheorie der Wissenschaftlichen Hochschule für Unternehmensführung (WHU) in Vallendar. Er ist Unternehmensberater bei McKinsey & Company, Inc. in München.
Title:Employee Stock Option Compensation: A behavioral finance approachFormat:PaperbackDimensions:268 pagesPublished:December 10, 2004Publisher:Deutscher UniversitätsverlagLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:3824482134

ISBN - 13:9783824482139


Table of Contents

Theoretical and empirical assessmentsReview of risk-neutral valuation modelsUtility-based stock-options valuationA new model to value executive stock optionsExperimental test of subjective valuations