This article analyzes the timing of CEO stock option awards, as a method of investigating
corporate managers' influence over the terms of their own compensation. In
a sample of 620 stock option awards to CEOs of Fortune 500 companies between 1992
and 1994, I find that the timing of awards coincides with favorable movements in
company stock prices. Patterns of companies' quarterly earnings announcements are
consistent with an interpretation that CEOs receive stock option awards shortly
before favorable corporate news. I evaluate and reject several alternative explanations
of the results, including insider trading and the manipulation of news announcement
dates. |