Opportunistic Timing of Outside Director Grants Correlated to Lack of Independent Directors

“Lucky Directors”, a paper on SSRN by authors Lucian Bebchuk, Yaniv Grinstein, and Urs Peyer discusses an empirical study tracking outside director option grant events for public firms from 1996-2005 and finds that 9% were “lucky grant events” – falling on days with a stock price equal to a monthly low.  The authors estimate that about 800 of these “lucky grant events” owed their status to opportunistic timing rather than mere luck.  Interestingly, the study also finds a correlation between the number of “lucky grant events” and the lack of a majority of independent directors on the board.

Bebchuk, Lucian Arye, Grinstein, Yaniv and Peyer, Urs C., "Lucky Directors" (December 2006). Harvard Law and Economics Discussion Paper No. 573 Available at SSRN.