Employees’ Attitudes Toward Equity-Based Compensation

Menachem Abudy, Efrat Shust

Research output: Contribution to journalComment/debate


This article presents a field study that examines the subjective value of equity-based compensation and investigates the relationship between attitude toward risk and compensation preferences. The participants in the field survey received equity-based compensation in the past but lack financial education background. We find that the respondents exhibit difficulty in estimating the value of employee stock options, which usually results in a subjective value that is lower than the objective value (calculated using the Black–Scholes model). Additional findings demonstrate the presence of behavioral biases such as priming and mental anchoring. Finally, we document an absence of transitivity in the preferences of 10% of the respondents.

Original languageEnglish
Pages (from-to)246-253
Number of pages8
JournalCompensation and benefits review
Issue number5
StatePublished - 1 Sep 2012
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2013 SAGE Publications.


  • employee stock options
  • equity-based compensation
  • restricted stocks


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