The structure of executive compensation contracts: UK evidence

In this article we examine CEO stock option contracts using UK data for the 1997 fiscal year. We show how the portfolio of options varies with firm we alth; describe the structure of the contract (in terms of vesting criteria related to performance targets); and illustrate whether the option performa nce criteria is historically 'demanding'. Finally, we show how the pay-perf ormance term varies with the structure of the option contract. Our new evid ence shows the complex structure of UK option contracts for CEOs. We augmen t this data with rich interview data to show the complexity of CEO compensa tion contracts and how they are set. (C) 2000 Elsevier Science Ltd. All rig hts reserved.