TY  - JOUR
AU  - Bebchuk,Lucian A.
AU  - Grinstein,Yaniv
AU  - Peyer,Urs
TI  - Lucky CEOs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12771
PY  - 2006
Y2  - December 2006
UR  - http://www.nber.org/papers/w12771
L1  - http://www.nber.org/papers/w12771.pdf
N1  - Author contact info:
Lucian A. Bebchuk
Harvard Law School
1545 Massachusetts Avenue
Cambridge, MA 02138
Tel: 617/495-3138
Fax: 617/812-0554
E-Mail: bebchuk@law.harvard.edu

Yaniv Grinstein
Johnson Graduate School of Management
Cornell University
371 Sage Hall
Ithaca, NY 14853
Tel: 607/255-257-6201
E-Mail: yg33@cornell.edu

Urs Peyer
INSEAD - Finance
Boulevard de Constance
F-77305 Fontainebleau Cedex  FRANCE
E-Mail: urs.peyer@insead.edu
AB  - We study the relation between corporate governance and opportunistic timing of CEO option grants via backdating or otherwise. Our methodology focuses on how grant date prices rank within the price distribution of the grant month. During 1996-2005, about 12% of firms provided one or more lucky grant -- defined as grants given at the lowest price of the month -- due to opportunistic timing. Lucky grants were more likely when the board did not have a majority of independent directors and/or the CEO had longer tenure -- factors associated with increased influence of the CEO on pay-setting. We find no evidence that gains from manipulated grants served as a substitute for compensation paid through other sources; total reported compensation from such sources was higher in firms providing lucky grants. Finally, opportunistic timing has been widespread throughout the economy, with a significant presence in each of the economy's twelve (Fama-French) industries.
ER  -