The Efficiency of Equity-Linked Compensation: Understanding the Full Cost of Awarding Executive Stock Options
推导了衡量股权薪酬无谓成本的方法，发现平均纽约证券交易所公司的高管将期权价值估为市场价值的70%，而互联网等快速成长企业的高管仅估为53%，引发对激励薪酬成本效益的质疑。
To properly align incentives using equity-linked compensation, the firm’s managers must be exposed to firm-specific risks, but this forced concentrated exposure prevents the manager from optimal portfolio diversification. Because undiversified managers are exposed to the firm’s total risk, but rewarded (through expected returns) for only the systematic portion of that risk, managers will value stock or option-based compensation at less than its market value. This paper derives a method to measure this deadweight cost, which empirically can be quite large: managers at the average NYSE firm who have their entire wealth invested in the firm value their options at 70% of their market value, while undiversified managers at rapidly growing, entrepreneurially-based firms, such as Internet-based firms, value their option-based compensation at only 53% of its cost to the firm. These estimates prompt questions of whether compensation plans in such firms are weighted too heavily towards incentive-alignment to be cost effective.