Study: Hefty Executive Stock Options Breed Product Recalls

New York Times columnist Gretchen Morgenson reports on a study that found a correlation between the percent of executive compensation that consists of stock options and the likelihood a company will suffer a serious product recall. “If options are generally causing C.E.O.s to be more aggressive,” explained one of the study’s authors, “then it makes sense that more mistakes could occur and consumers could be affected.” Without naming names of individuals or companies, the study looked at compensation packages of 386 CEOs. The companies studied were in two industry sectors, one including foods, beverages and personal care products, the other health care products, including medical devices and pharmaceuticals.