Stock options and total payout

Charles J. Cuny; Gerald S. Martin; John J. Puthenpurackal

doi:10.1017/S0022109009090115

Stock options and total payout

Charles J. Cuny
, Gerald S. Martin
, John J. Puthenpurackal

Research output: Contribution to journal › Article › peer-review

47 Scopus citations

Abstract

In this paper, we examine how stock option usage affects total corporate payout. Using fixed-effects panel data estimators on various samples of ExecuComp firms from 1993 to 2005, we find the higher the executive stock options, the lower the total payout, ceteris paribus. We also find some evidence that firms increase payouts through repurchases in order to offset earnings per share dilution that occurs due to usage of executive and non-executive stock options. However, incentives from not having dividend protection for options appear to dominate those from antidilution, resulting in lower total payout for firms with higher options usage. COPYRIGHT 2009, MICHAEL G. FOSTER SCHOOL OF BUSINESS, UNIVERSITY OF WASHINGTON.

Original language	English
Pages (from-to)	391-410
Number of pages	20
Journal	Journal of Financial and Quantitative Analysis
Volume	44
Issue number	2
DOIs	https://doi.org/10.1017/S0022109009090115
State	Published - Apr 2009

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abstract = "In this paper, we examine how stock option usage affects total corporate payout. Using fixed-effects panel data estimators on various samples of ExecuComp firms from 1993 to 2005, we find the higher the executive stock options, the lower the total payout, ceteris paribus. We also find some evidence that firms increase payouts through repurchases in order to offset earnings per share dilution that occurs due to usage of executive and non-executive stock options. However, incentives from not having dividend protection for options appear to dominate those from antidilution, resulting in lower total payout for firms with higher options usage. COPYRIGHT 2009, MICHAEL G. FOSTER SCHOOL OF BUSINESS, UNIVERSITY OF WASHINGTON.",

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Stock options and total payout

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