Knowledge@Wharton

Stock options motivate executives to increase corporate performance, thus boosting stock prices, Wharton professor David Larcker told attendees of a one-day conference held recently by Wharton and Singapore Management University (SMU). Citing Internet and other high-tech firms’ large stock option grants and their corresponding soaring stock valuations, Larcker predicted stock options will become increasingly popular.

Larcker, who has conducted studies demonstrating the link between performance and stock options, was the keynote speaker at the conference at Singapore Management University, where Wharton interim associate dean Janice R. Bellace serves as president. Singapore’s minister for health and second minister for finance, Lim Hng Kiang, also spoke to conference attendees about the importance of stock options in a knowledge-based economy.