Topic：Employee Mobility Restrictions and Non-executive Employee Stock Options
Speaker: Dai Yun，Sun Yat-san University
Time：13:30-15:00, May 15, 2020
Way of hosting：on-line

Abstract：
This paper studies the effect of reduced employee mobility on employers' incentive to grant stock options for employee retention purpose. Exploiting staggered amendments of non-compete enforceability in three U.S. states as an exogenous shock to employee mobility, we find that stricter enforcement of non-compete clauses in a state negatively affects the value of stock options granted to non-executive employees by firms in the state. Furthermore, this negative effect is more pronounced for firms with higher competition for human capital. These findings suggest that stronger non-compete enforcement weakens firms’ needs of using stock options to retain employees. Our findings reveal the importance of legal restrictions on employee mobility in shaping corporate employee compensation policies.