Options awards for Australian CEOs: The who, what and why

CPA Australia
Publication Type:
Journal Article
Australian Accounting Review, 2002, 12 (1), pp. 25 - 35
Issue Date:
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The compensation structure for Australian CEOs, and especially the extent to which they receive executive stock options, is explored. Evidence suggests that the award of executive stock options is common in Australia, but not in as systematic a manner as has been documented for US CEOs. Where ESOs are awarded, they form a significant component of total compensation, even allowing for limitations in the way their value is approximated. Modeling the use of ESOs shows relatively few empirical regularities, other than a positive association between firm size and ESO use. This is consistent with a view that ESOs are a form of rent extraction by CEOs, but it may also reflect a bias toward their use created by accounting rules.
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