This paper analyzes the timing of CEO stock option awards as a method of investigating corporate managers' influence over the terms of their own compensation. Using data from 620 stock option awards to CEOs of Fortune 500 companies between 1992 and 1994, the author finds that the timing of awards coincides with favorable movements in company stock prices. Patterns of companies' quarterly earnings announcements are consistent with an interpretation that CEOs receive stock option awards shortly before favorable corporate news. The author evaluates and rejects several alternative explanations of the results, including insider trading and the manipulation of news announcement dates. The paper discusses the influence of CEOs on their own compensation, suggesting that they may use their power to obtain more performance-based pay in advance of anticipated stock price increases. The author finds that companies making stock option awards to their CEOs outperform the market on a risk-adjusted basis by slightly more than 2% during the period beginning the day after the award and lasting approximately ten weeks. These stock price increases occur even though news of CEO stock option awards remains undisclosed until proxy statements are published approximately three months after the end of company fiscal years. The author explores various alternative explanations for the results, including the possibility that news of option awards reaches the investing public around the time of the grant date, or that insider trading by CEOs or others accounts for the rise in stock prices just after CEO option awards. The author also considers the possibility that boards of directors may acquiesce in CEOs' manipulation of the dates of stock option awards as an indirect method of permitting insider trading by managers. However, the author concludes that these explanations are not supported by the data. The paper also discusses the role of stock options in executive compensation, suggesting that their role is more complex than previously thought. The author finds that the timing of stock option awards is often favorable to the CEO, and that this may be due to the CEO's influence over the terms of their compensation. The author concludes that the results of this study suggest that managers may manipulate the compensation contracting process to appropriate value from stockholders.This paper analyzes the timing of CEO stock option awards as a method of investigating corporate managers' influence over the terms of their own compensation. Using data from 620 stock option awards to CEOs of Fortune 500 companies between 1992 and 1994, the author finds that the timing of awards coincides with favorable movements in company stock prices. Patterns of companies' quarterly earnings announcements are consistent with an interpretation that CEOs receive stock option awards shortly before favorable corporate news. The author evaluates and rejects several alternative explanations of the results, including insider trading and the manipulation of news announcement dates. The paper discusses the influence of CEOs on their own compensation, suggesting that they may use their power to obtain more performance-based pay in advance of anticipated stock price increases. The author finds that companies making stock option awards to their CEOs outperform the market on a risk-adjusted basis by slightly more than 2% during the period beginning the day after the award and lasting approximately ten weeks. These stock price increases occur even though news of CEO stock option awards remains undisclosed until proxy statements are published approximately three months after the end of company fiscal years. The author explores various alternative explanations for the results, including the possibility that news of option awards reaches the investing public around the time of the grant date, or that insider trading by CEOs or others accounts for the rise in stock prices just after CEO option awards. The author also considers the possibility that boards of directors may acquiesce in CEOs' manipulation of the dates of stock option awards as an indirect method of permitting insider trading by managers. However, the author concludes that these explanations are not supported by the data. The paper also discusses the role of stock options in executive compensation, suggesting that their role is more complex than previously thought. The author finds that the timing of stock option awards is often favorable to the CEO, and that this may be due to the CEO's influence over the terms of their compensation. The author concludes that the results of this study suggest that managers may manipulate the compensation contracting process to appropriate value from stockholders.