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The authors examine the role of stock liquidity in CEO equity compensation design. For a sample of publicly traded firms from 2007 to 2020, the authors find that greater stock liquidity is associated with a higher proportion of stock awards relative to the proportion of options in CEO equity compensation. The results of this study suggest that stock price informativeness on the grant date has a differential effect on the preference for the type of equity compensation awarded to CEOs. The empirical results are supported by multivariate analyses using alternative measures of stock liquidity and a two-stage least squares (2SLS) specification that alleviates endogeneity concerns. Furthermore, the authors document that the firm-specific increase in the proportion of stock awards compared to the proportion of stock options is associated with a firm-specific increase in stock liquidity. Collectively, the analyses suggest that stock liquidity as a measure of stock price informativeness contributes to the choice of CEO equity compensation design.