Why Would a Board Approve Nine-Figure CEO Pay?

We recently published a paper on SSRN (“Mega Grants: Why Would A Board Approve Nine-Figure CEO Pay?”) that examines the practice of awarding “mega grants” to CEOs.

Mega grants are large, one-time equity awards with long vesting periods (up to 10 years) granted in lieu of or in addition to annual awards with the intended purpose of providing significant incentive to achieve long-term targets. Mega grants were popular in the late 1990s (having been awarded to the CEOs of Oracle, Walt Disney, IAC/Interactive, and others) but fell out of favor in response to shareholder criticism. A 2005 accounting change that required companies to record the fair value of equity awards in the financial statements further decreased the attractiveness of large-scale option awards. READ MORE