Explain the reasoning behind employee stock options as a source of compensation. What do options accomplish that salary and bonus adjustments don't accomplish? Who in a company should receive employee stock options?
What will be an ideal response?
Companies are often run by people who are not the major shareholders. Employee stock options offer a way to link compensation to incentives that are consistent with the goal
of increasing shareholder value. Success most often occurs when there is a direct and transparent relationship between the actions of employees who receive stock options and changes in stock prices. It is for this reason that many people feel employee stock options should be given only to the top echelons in management, such as the board of directors, president, CEO, CFO, division heads, and department heads.
You might also like to view...
The opening of routine messages can be used to state the purpose and nature of information being provided
Indicate whether the statement is true or false.
Market research shows potential customers will buy a particular product at a selling price of $3,100 . If the desired profit is 28 percent of target cost, the company should make the product if the cost does not exceed
a. $3,100. b. $868. c. $2,232. d. $2,422.
Advertising involves a personal presentation by the firm's sales force for the purpose of making sales and building customer relationships
Indicate whether the statement is true or false
In many industries that have a process manufacturing operation, the production process is of a nature that some units will always be lost due to evaporation, shrinkage, spillage, or other factors. These normal losses:
a. are 100% avoidable costs. b. are absorbed by good units. c. are charged to a separate Loss from Normal Spoilage account. d. are treated as period costs.