|  | | 2006 News and Press Releases | | |
HEADLINE NEWS:
'Lucky' Stock Options Not Limited to Executives; Study Finds Board Members Profit, Too
Terence OHara
Washington Post. December 18, 2006
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EXCERPT: Chief executives weren't the only ones enjoying near-guaranteed profits from stock options in the past decade. Outside directors at hundreds of American companies also received option grants that are likely to have been manipulated, a new study found. According to the study, 9 percent of 29,000 option grants to outside directors from 1996 to 2005 were granted on a day when the company stock price was at a monthly low. The likelihood of such a concentration of "lucky" grants is so low as to be statistically impossible, the study's authors said. "It's like going to Vegas thousands of times and betting on red every time and winning more than half the time," said Lucian Bebchuk, the Harvard University professor who co-authored the report, titled "Lucky Directors," with Cornell University's Yaniv Grinstein and Urs Peyer, a professor at the French business school Insead. "From a numerical standpoint, it can't be random. There has to be some manipulation of the outcome." The study found the "lucky grants" at about 460 firms, involving about 1,400 outside directors. |
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