The Value of Stock Options To Non-Executive Employees

This study empirically investigates the value employees place on stock options using information from the option exercise behavior of individuals. Employees hold options for another period if the value from holding them and reserving the right to exercise them later is higher than the value of exercising them immediately and collecting a profit equal to the stock price minus the exercise price. This simple model implies the hazard describing employee exercise behavior reveals information about the value to employees of holding options another time period. We show the parameters of this model are identified with data on multiple option grants per employee and we apply this model to the disposition of options received in the 1990s by a sample of over 2000 middle-level managers from a large, established firm outside of manufacturing. Exercise behavior is modeled using a random effects probit model of monthly exercise behavior that is estimated using simulated maximum likelihood estimation methods. Our estimates show there is substantial heterogeneity (observed and unobserved) among employees in the value they place on their options. Our estimates show most employees value their options at a value greater than the option’s Black-Scholes value

Premium Copayments and the Trade-off between Wages and Employer-Provided Health Insurance

This paper estimates the trade-off between salary and health insurance costs using data on Illinois school teachers between 1991 and 2008 that allow us to address several common empirical challenges in this literature. We find no evidence that changes in teachers’ salaries respond to changes in insurance cost, but teachers paid about 17 percent of the cost of individual health insurance and about 46 percent of the cost of their family members’ plans through increased premium copayments. Our results indicate that premium increases were not associated with commensurate increases in teachers’ valuation of their health insurance plans

New Data for Answering Old Questions Regarding Employee Stock Options

This paper is a description and summary of existing questions and sources of data on stock options with an emphasis on two issues; what are the issues surrounding stock options in the national accounts and what value do employees place on stock options? We survey many existing data sources and outline some of the ways these data can be used to answer questions about the use and impact of employee stock options. The data sources include administrative records from individual firms, survey data of employee perceptions, disclosure filings with the SEC and other government, nonprofit, and international sources. We explore ways to investigate the value of options to employees and their cost to the firms using data on employee exercise decisions. Finally, we discuss the implications of our findings for public policy, the reporting of stock options, and how options are considered in the national accounts

Employees’ Choice of Method of Pay

Who chooses what type of pay? The costs and benefits of “flexible” and “cafeteria-style” benefit plans have been discussed for some time. Additionally, many papers have considered the potential costs and benefits of certain types of pay plans (e.g. salaries versus piece rates). In this paper, we use detailed data from a specific firm that annually set the total compensation level for each of its employees but then did something extremely unusual. At the start of each pay year, the firm set an exchange rate for the dollar trade-off between cash pay and stock option pay. It then gave every employee nearly complete choice over the fraction of their pay that was contingent (stock options, bonus) versus guaranteed (salary). There are several empirical findings. There is substantial variation in the choice of contingent pay with some workers choosing almost all base pay and others choosing almost entirely stock options. Younger employees, more experienced employees, higher paid employees, and male employees are more likely to allocate a larger fraction of their total compensation to at-risk alternatives. The robustness of these results varies somewhat depending on the empirical specification and set of covariates used

The effect of institutional distance on cross-border merger and acquisition time to completion: an empirical analysis of European Union deals

Cross-border merger and acquisitions (CBM&As) have extensively been used as a favorite entry mode in foreign markets, rapidly providing resources, competencies and local intelligence without risk of facing the liability of foreignness, or the burden of starting a greenfield investment. Studies indicate that greater institutional distance increases the costs of doing business in a foreign country, because it is associated with greater uncertainty and non-familiarity with the local environment. Besides that, prolonged duration of the M&A process has negative consequences for target and acquirer firms and bear significant costs for both parties. However, until so far, the studies regarding the effect of institutional distances on time to completion of a CBM&A deal are scarce. My theoretical model speculates on the effect of institutional distances (Political, Economic, Administrative and Cultural) in CBM&As time to completion. I further propose that European Union membership, of both target and acquirer countries, moderates the effect of institutional distances on CBM&As time to completion. The hypotheses are tested using a sample of 2,110 CBM&A deals that occurred during 2011 in European Union. On one hand, the results suggest that Political and Cultural distance have a positive effect on the time hiatus between announcement and completion of a CBM&A deal. On the other hand, the results suggest that European Union membership does moderate the effect of Economic and Administrative distance in CBM&A time to completion

Bargaining Power, Strike Duration, and Wage Outcomes: An Analysis of Strikes in the 1880s

We study strike durations and outcomes for some 2000 disputes that occurred between 1881 and 1886. Most post-strike bargaining settlements in the 1880s fell into one of two categories: either a union "victory", characterized by a significant wage gain or hours cut, or a union "defeat", characterized by the resumption of work at the previous terms of employment. We find a strong negative relation between strike duration and the value of the settlement to workers. reflecting the declining probability of a union victory among longer strikes. For the subset of strikes over wage increases we estimate a structural model that includes equations for the capitulation times of the two parties and a specification of the wage increase conditional on a union victory. This framework provides a simple index of employees' relative bargaining power. based on the relative time to a union capitulation. Employees' relative bargaining power was higher in disputes involving fewer workers and in union ordered strikes. but substantially lower after the Haymarket Square incident in Chicago in 1886.

Regulation of atrial natriuretic peptide secretion by a novel Ras-like protein

Atrial cardiomyocytes, neurons, and endocrine tissues secrete neurotransmitters and peptide hormones via large dense-core vesicles (LDCVs). We describe a new member of the Ras family of G-proteins, named RRP17, which is expressed specifically in cardiomyocytes, neurons, and the pancreas. RRP17 interacts with Ca2+-activated protein for secretion-1 (CAPS1), one of only a few proteins known to be associated exclusively with LDCV exocytosis. Ectopic expression of RRP17 in cardiomyocytes enhances secretion of atrial natriuretic peptide (ANP), a regulator of blood pressure and natriuresis. Conversely, genetic deletion of RRP17 in mice results in dysmorphic LDCVs, impaired ANP secretion, and hypertension. These findings identify RRP17 as a component of the cellular machinery involved in regulated secretion within the heart and potential mediator of the endocrine influence of the heart on other tissues

Comparative Genome-Wide Screening Identifies a Conserved Doxorubicin Repair Network That Is Diploid Specific in Saccharomyces cerevisiae

The chemotherapeutic doxorubicin (DOX) induces DNA double-strand break (DSB) damage. In order to identify conserved genes that mediate DOX resistance, we screened the Saccharomyces cerevisiae diploid deletion collection and identified 376 deletion strains in which exposure to DOX was lethal or severely reduced growth fitness. This diploid screen identified 5-fold more DOX resistance genes than a comparable screen using the isogenic haploid derivative. Since DSB damage is repaired primarily by homologous recombination in yeast, and haploid cells lack an available DNA homolog in G1 and early S phase, this suggests that our diploid screen may have detected the loss of repair functions in G1 or early S phase prior to complete DNA replication. To test this, we compared the relative DOX sensitivity of 30 diploid deletion mutants identified under our screening conditions to their isogenic haploid counterpart, most of which (n = 26) were not detected in the haploid screen. For six mutants (bem1Δ, ctf4Δ, ctk1Δ, hfi1Δ,nup133Δ, tho2Δ) DOX-induced lethality was absent or greatly reduced in the haploid as compared to the isogenic diploid derivative. Moreover, unlike WT, all six diploid mutants displayed severe G1/S phase cell cycle progression defects when exposed to DOX and some were significantly enhanced (ctk1Δ and hfi1Δ) or deficient (tho2Δ) for recombination. Using these and other “THO2-like” hypo-recombinogenic, diploid-specific DOX sensitive mutants (mft1Δ, thp1Δ, thp2Δ) we utilized known genetic/proteomic interactions to construct an interactive functional genomic network which predicted additional DOX resistance genes not detected in the primary screen. Most (76%) of the DOX resistance genes detected in this diploid yeast screen are evolutionarily conserved suggesting the human orthologs are candidates for mediating DOX resistance by impacting on checkpoint and recombination functions in G1 and/or early S phases