Stock-based incentive contracts and managerial performance the case of Ralston Purina Company1We appreciate the comments and suggestions of Gordon Alexander Rick Antle George Benston Nick Dopuch Patty Dechow Mike Ettredge Tom George Mahendra Gupta Steve Huddart Cathy Niden Jonathan Paul Mort Pincus Greg Sierra Bob Virgil Greg Waymire and seminar participants at Arizona State University Emory University Louisiana State University University of Massachusetts at Amherst and at the American Finance Association and Financial Management Association annual meetings We especially appreciate the comments and suggestions of Michael Bradley Kenneth M Eades S P Kothari and Kevin J Murphy (a referee) Special thanks go to Karen Wruck (a referee) and Michael Jensen (the editor) for many helpful comments and suggestions We also appreciate the editorial assistance of Sandra Moore and Janice Willett and the research assistance of Kathryn Wilkens Charles Wasley acknowledges the financial support of the College of Business Administration at the University of Iowa 1