CBE Seminar: Eirik Kristiansen Hedging Compensation Contracts
The Center for Business Economics is pleased to invite you to a seminar with Eirik Kristiansen, NHH.
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- E209/210, NHH
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Hedging Compensation Contracts (with Tore Ellingsen)
Abstract: Why are managers allowed to sell their stock options? By selling their stock options managers remove incentives for effort. Consequently, it is puzzling that empirical studies reveal that managers are allowed to sell their options. We show that hedging of stock options should be allowed if the compensation contact is designed to retain managers in a competitive labor market.