3.7 The Stock Option Explosion (1992–2001)

As shown in Figure 17 (and Figures 3 and 4), the median pay for CEOs in S&P 500 firms more than tripled between 1992 and 2001, driven by an explosion in the use of stock options. CEO incentive compensation in the early 1990s was split about evenly between options and accounting-based bonuses. By 1996, options had become the largest single component of CEO compensation in S&P 500 firms, and the use of options was even greater in smaller firms (and especially high-tech start-ups). By 2000, stock options accounted for more than half of total compensation for a typical S&P 500 CEO.


Figure 17 Median Grant-date ...

Get Handbook of the Economics of Finance now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.