Value of executives' options rose in '06 |
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Tue, 27 Feb 2007 20:54
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NEW YORK (AP) - Last year's equity boom could pay off nicely for chief executives of 100 large companies whose unexercised stock options gained $2 billion in value, a study released Tuesday found.The median 'in-the-money' value of unexercised stock options for the CEOs in the analysis increased 47 percent in 2006, to $28 million, according to the analysis conducted by consulting firm Watson Wyatt Worldwide. Stock options, which give the holder the right to 'exercise,' or buy shares at a set strike price, are considered 'in the money' if the market price is above the options' strike price.As a stock rises, so does the value of the company's executives' in-the-money unexercised options. At higher-performing companies, the in-the-money value of unexercised stock options for CEOs more than tripled last year, from $13.8 million in 2005 to $42.6 million in 2006, according to the study. The higher performing companies' total returns to shareholders averaged 25 percent last year.CEOs at lower-performing companies saw a 5 percent increase in the in-the-money value of unexercised stock options, while their total return to shareholders averaged 7 percent.The study looked at 100 companies in the Standard & Poor's 500, all of which used stock options, had the same CEO in office for 2005 and 2006 and had fiscal years ending in December.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Companies can cover taxes for options 