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Bebchuk, Grinstein, & Peyer on "Lucky" CEOs & Directors

By Lawrence Solum

Lucian A. Bebchuk, Yaniv Grinstein and Urs Peyer (Harvard University - Harvard Law School , Cornell University - Samuel Curtis Johnson Graduate School of Management and INSEAD - Finance) have posted Lucky CEOs and Lucky Directors on SSRN. Here is the abstract:

This paper integrates and further develops the analysis of two discussion papers we circulated earlier, ?Lucky CEOs? and ?Lucky Directors.? We study the relation between opportunistic timing of option grants and corporate governance, focusing on at-the-money ?lucky? grants awarded at the lowest price of the grant month. We find that both CEO and independent directors received an abnormally high number of lucky grants, and that opportunistic timing of director grants was not merely a by-product of their coinciding with executive grants or of firms? routinely timing all grants. Lucky grants to CEOs and directors are associated with higher CEO compensation from other sources, and are correlated with a lack of majority of independent directors on the board, no independent compensation committee with an outside blockholder, or a long-serving CEO. For any given firm, the odds of a lucky grant increased when the payoffs from luck were high and when a preceding grant was lucky. Lucky CEOs is available on SSRN at: http://papers.ssrn.com/abstract =945392 Lucky Directors is available on SSRN at: http://papers.ssrn.com/abstract =952239

Full post as published by Legal Theory Blog on September 10, 2010 (boomark / email).