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Quartz: Giving a CEO too many stock options can make a company perform worse

Conventional wisdom has it that paying company bosses with a lot of stock and options aligns their interests with those of shareholders. But a working paper from three researchers in the US and the UK suggest equity-heavy pay packages do exactly the opposite: Depress returns for years to follow…“The whole point of the paper was to show that options really work,” says P. Raghavendra Rau, a University of Cambridge finance professor, who wrote the paper with Michael J. Cooper of the University of Utah, Huseyin Gulen of Purdue University. “It was a little surprising…”

Read the full article [qz.com]