Abstract
A useful way in which to examine the British approach to top executive pay is through the use made of executive share options as a component of the pay package. In marked contrast with developments in the USA, institutional investors have taken a leading role in conditioning the type of pay package that is possible for Britain’s top executives. This intervention can be seen as leading initially to an expansion in the use of executive share options but more recently to a marked decline in their use. In general, it is far from clear that such intervention has been particularly productive. This paper attempts to trace these developments and, using the actual histories of 62 FTSE-100 companies, offers an empirical evaluation of the effectiveness of option-based incentive pay packages vs. the more recently favored share-based packages.
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Main, B.G.M. (1999). The rise and fall of executive share options in Britain. In: Carpenter, J., Yermack, D. (eds) Executive Compensation and Shareholder Value. The New York University Salomon Center Series on Financial Markets and Institutions, vol 4. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-5192-5_7
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DOI: https://doi.org/10.1007/978-1-4757-5192-5_7
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