Richard Stanton from UC Berkeley is giving a VGSF research seminar on "Optimal Exercise of Executive Stock Options and Implications for Firm Cost" on FRIDAY, June 22nd, from 15:30 to 17:00 in HS 7 at the BWZ, Brünnerstrasse 72, 1210 Wien. See the VGSF webpage (Activities & Events --> Research Seminars) for a map of the location, the paper to download and this term's entire schedule of seminars.

Please find the paper's abstract below. Please contact Youchang Wu if you would like to meet and discuss your research with Richard.

Best, Michael Halling

Abstract The cost of executive stock options has become a focus of investor attention. The difficulty is that option cost depends on the exercise policies of executives. This paper analyzes the optimal policy for a general utility-maximizing executive holding a nontransferable option. We show analytically how the policy varies with risk aversion, wealth, and dividend rate, and when the policy is characterized by a single stock price boundary. We also provide an example with a split continuation region. In CRRA examples, option value decreases with risk aversion, increases with wealth, increases with outside hedging opportunities, but can actually decline with volatility.