Scott Julian to be published in Harvard Business Review
Mike Ilitch School of Business Associate Professor of Management Scott Julian has been accepted for publication in Harvard Business Review.
Harvard Business Review publishes articles on strategy, innovation, leadership, and other business and management topics.
The article, “Should you Reward your CEO with Stock Options,” examines situations where stock options can be a useful tool and situations where they do more harm than help.
This article was co-authored by Mike Greiner, a former student in the Ilitch School’s Ph.D. program in management.
Stock options are both widely used and widely questioned. Research demonstrates that, contrary to stock option boosters, this form of CEO compensation is not a panacea, and there exist situations where issuing them is damaging. Indeed, now that the accounting profession has established that stock options are a real cost to business, either these expenditures should lead to real returns to shareholders or they should not be made. But contrary to across-the-board critics of options, where the potential for CEO opportunism is high, stock options can be a useful tool to align top managers’ interests with those of their bosses: the firm’s shareholders. Thus, rather than being “good for what ails you,” this study suggests that CEO stock options should be “taken only when needed.”