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The Structure of Executive Compensation Contracts: UK Evidence

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<mark>Journal publication date</mark>08/2000
<mark>Journal</mark>Long Range Planning
Issue number4
Volume33
Number of pages26
Pages (from-to)478-503
Publication statusPublished
Original languageEnglish

Abstract

In this article we examine CEO stock option contracts using UK data for the 1997 fiscal year. We show how the portfolio of options varies with firm wealth; describe the structure of the contract (in terms of vesting criteria related to performance targets); and illustrate whether the option performance criteria is historically ‘demanding’. Finally, we show how the pay–performance term varies with the structure of the option contract. Our new evidence shows the complex structure of UK option contracts for CEOs. We augment this data with rich interview data to show the complexity of CEO compensationcontracts and how they are set.