The Impact of Employee Stock Option Adoption and Incidence on Productivity: Evidence from US Panel Data

This paper examines the productivity effect of broad-based and executive stock option programs in adoption year and five subsequent years. The findings include a positive impact on productivity, which is maintained over a five-year period after adoption for executive plans but diminishes immediately for broad-based plans. We interpret these findings as evidence of stock option usage being of benefit to organizations. However, to sustain the impact of broad-based plans options, grants may need to be made with the same frequency as executive option grants.