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And they probably encouraged C.E.O.'s to expose their companies to more risk, because options' value grows as risk does.
If the company were to attract new financing, sell stock to the public or be acquired, the options' value could increase.
But if the stock appreciates faster than the index, the executives can make more money than they otherwise would have -- because a multiplier kicks in to increase the options' value.
Unlike most studies of executive pay, the survey also compared the most common method of estimating the value of stock options with the one that arguably influences executive behavior the most: the options' value based on the current stock price.
Citigroup, for example, takes the unusual step of discounting the amount derived through a standard option-pricing model by one-quarter, in order to reflect the cost of protecting the options' value.
Sprinting After Options Value is not dead.
Similar(45)
Each received 350,000 options, valued at $3.5 million.
She also received stock options valued at $6.8 million.
In 2000, Mr. Purcell received options valued at $15.1 million.
Mr. O'Reilly already owns stock options valued at $34 million.
He was also awarded stock and options valued at $18.3 million.
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