CEOs with Lots of Stock Options Are More Likely to Break Laws

Executive compensation packages have long been known to influence CEO behavior. Many have studied, for example, how different forms of compensation affect business outcomes from increased risk-taking and innovation to greater acquisitions and divestitures. However, these outcomes are not always positive. Compensation has also been linked to drastically harmful events. In 2011, for example, the Financial Crisis Inquiry Commission claimed that executives’ compensation systems contributed to the Great Recession by offering enormous rewards for financial gains and few penalties for losses.