Underwater stock options drive top executives turnover

When the market price of company stock falls below the exercise price, the options are considered to be "out of the money" or underwater. Many publicly traded firms have become concerned about retaining highly valued executives who hold underwater stock options, fearing that they will voluntarily leave the firm for a better position elsewhere. A new study in Personnel Psychology reveals that voluntary top executive turnover was more likely to occur as executives' stock option portfolios fell further out of the money.

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