Real Estate Causes Real Problems for Investors: Regulating Executive Liquidation of Stock Options as a Source of Real-Estate Financing

A majority of the compensation that executives receive each year is equity-based. Executives often use their equity-based compensation as a source of financing for luxury real estate, often by exercising stock options and selling the shares. This executive financing transaction can have a negative effect on the stock price of the company for years to come. This Note addresses equity-based compensation and the legal requirements that companies must comply with when granting this form of compensation. It evaluates the executive real-estate-financing transaction within this legal framework and addresses problems that may arise with this transaction. This Note concludes by suggesting ways that the federal government can avoid the Potential pitfalls of executive real-estate financing.