This research study develops a conceptual and operational model that identifies the variables that determine how much restricted stock is offered to the Chief Executive Officer (CEO). Specifically, the study aims to determine how monitoring mechanisms, outsiders on the board of directors, block ownership, and institutional ownership, affect the amount of restricted stock offered to the CEO. It is believed that in the presence of monitoring mechanisms, the amount of restricted stock offered to the CEO is reduced (Ryan and Wiggins, 2001). The study identifies fourteen variables, including monitoring mechanisms, which are all used to establish how much restricted stock a firm should offer its CEO. The results indicate a negative relationship between all three monitoring mechanisms and restricted stock; however, only the variable, outsiders on the board, is statistically significant. The lack of significance for the other two monitoring variables suggests the possibility that ownership structure does not affect CEO compensation structure. However, it may be possible that a variable, such as stock options, may develop a relationship, since firms often utilize stock options in addition to, or in place of restricted stock. Still, the main goal of this study is to determine whether or not monitoring mechanisms have altered the compensation plans toward CEOs to include less restricted stock.
Stuetzer, Bradley C., "Effects of Monitoriing Mechanisms on CEO Restricted Stock Compensations" (2008). Senior Independent Study Theses. Paper 735.
Bachelor of Arts
Senior Independent Study Thesis
© Copyright 2008 Bradley C. Stuetzer