Employee Stock Option Compensation

1. Front Matter

   Pages I-XV

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2. Introduction to the topic

   • Florian Cornelis Wolff

   Pages 1-14

3. Theoretical & empirical assessment

   • Florian Cornelis Wolff

   Pages 15-52

4. Review of risk-neutral valuation models

   • Florian Cornelis Wolff

   Pages 53-77

5. Utility-based stock-option valuation

   • Florian Cornelis Wolff

   Pages 79-144

6. A new model to value executive stock option

   • Florian Cornelis Wolff

   Pages 145-193

7. Experimental test of subjective valuations

   • Florian Cornelis Wolff

   Pages 195-215

8. Conclusion and outlook

   • Florian Cornelis Wolff

   Pages 217-222

9. Back Matter

   Pages 223-255

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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.

• Aktienoptionen
• Behavioral Finance
• Bewertung
• Incentive
• Management
• Management-Vergütung
• Prospect theory
• Prospekt-Theorie
• Stock options
• Vergütung
• assessment

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.

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