Explaining executive pay

More about the book

The study of executive pay began during a lecture on option valuation in spring 2002 at the Norwegian School of Economics and Business Administration. This sparked curiosity about how companies with significant stock options for executives responded to the steep declines in share prices since 2000. Consequently, I wrote my master thesis on "Employee stock options and falling share prices," focusing on Norwegian IT companies that had both granted many options and experienced severe price drops. My interest in executive pay persisted, as I believed it could contribute meaningfully to both academic research and policy-making. In summer 2002, I continued my research at the University of St. Gallen, examining the factors influencing Swiss companies' adoption of executive stock option plans. Key findings indicated that large outside shareholders and CEO duality played significant roles in this decision-making process. At that time, Switzerland had limited disclosure on executive pay. However, the Swiss Stock Exchange introduced new listing guidelines mandating detailed Corporate Governance information starting with the 2002 annual report, set to be published in 2003.