of Contents
INTRODUCTION
I. MANAGERIAL POWER
II. OUTRAGE COSTS
III. THE PERCEIVED-COST VIEW
A. Assumption 1: Undiversified employees (rationally) perceive options as having low values
B. Assumption 2: Companies (erroneously) perceive options as inexpensive ways to convey
compensation
C. Implications
1. Market-indexed options
2. Uniform exercise prices
3. Resetting exercise prices
4. Freedom to unwind incentives
5. Reload options
6. International differences in CEO pay
D. Solutions
IV. CONCLUSION


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