Title: Outside director remuneration and the decision to grant CEO stock options

Authors: Kiridaran Kanagaretnam, Robert Mathieu, Ramachandran Ramanan

Addresses: Michael G. DeGroote School of Business, McMaster University, Hamilton, Ont. L8S 4M4, Canada. ' School of Business and Economics, Wilfrid Laurier University, Waterloo, Ont. N2L 3C5, Canada. ' Department of Accountancy, Mendoza College of Business, University of Notre Dame, Notre Dame, IN 46556-0399, USA

Abstract: In this paper, we compare firm-specific attributes including outside director remuneration for two groups of firms. One of these groups consists of 96 firms that did not give stock options to the CEO during the sample period 1992–2001, while the other group of 571 firms granted stock options on a consistent basis during these years. Our results indicate that for the group with stock option grants, the remuneration to outside directors was significantly higher and the CEO had longer tenure compared to the other group. These results are robust even after controlling for other economic attributes associated with the decision to grant stock options.

Keywords: CEO stock options; outside director pay; corporate governance; remuneration; tenure.

DOI: 10.1504/IJBGE.2004.005250

International Journal of Business Governance and Ethics, 2004 Vol.1 No.2/3, pp.137 - 146

Published online: 16 Sep 2004 *

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