As of February 28, 2006, 958 publicly held companies accelerated the vesting of some or all of their employee stock options in advance of adopting SFAS 123 (R). We examine both the market reaction to these accelerations, as well as the determinants of the decision. Investors, in general, react...

As of February 28, 2006, 958 publicly held companies accelerated the vesting of some or all of their employee stock options in advance of adopting SFAS 123 (R). In doing so, these companies, on average, avoided $11.3 (8.4) million in pretax (after tax) expense, which represented 42 percent of...

Internal Revenue Code section 162(m) limits tax deductibility of executive compensation to $1 million per covered executive, with an exception for performance-based compensation. Both stock options and annual bonuses can qualify as performance-based, but they vary in the difficulty of...