June 25, 2025 Executive Compensation Executive & Director Pay Design Articles

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Can European-Style Options Resolve Technology’s Pay Paradox?

As expectations for compensation change, European-style derivatives may be an answer that satisfies shareholders and the C-suite.

The boards of technology companies are wrestling with a compensation paradox that threatens to divorce executives from long-term shareholder alignment: Management wants stable cash delivery, while boards want executive compensation tied to long-term value creation. This status quo around executive pay at technology companies is ripe for challenging.

Trying a more novel approach to stock options may help break the logjam. Shifting long-entrenched practices does not happen overnight. However, forward-thinking compensation committees should consider how tinkering with exercise windows, such as by introducing European-style derivatives or stock appreciation rights (SARs), can increase wealth-creation for recipients, better connect executive performance to long-term outcomes, and boost leadership retention.


View the full article as it was originally published.

Margaret Hylas

Jason Oney

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