Stock Options Paper

Stock Option Paper When companies try to motivate their executives with honorarium in the form of live farm animal options, it does non unendingly produce a hard movementing executive that readys it his death to advance the company (and in turn, his investment trust price). The idea is that when an executive is offered the option to buy stock at a contemporary low price, they will work harder within the company and make the stock price to rise. This would supposedly guarantee the executive a financial kick upstairs in the future. It turns out that muckle be not working harder just finding a way to bring in more(prenominal) money from their stocks by defence the visits of yield. When looking at the repercussions of falsifying the issuance date (backdating) of stock options, you start to see how the pretend itself could be considered unethical and illegal. When a company backdates its stock options, it designates the issuance date at a date before the date the b oard made the determination to grant the stock options. What this does is set down the actual buying price so the executive gains more money in the end.

The growth of stock options as a component of executive compensation has been dramatic, commencing with the general acceptance of the thought that an equity interest in the company is necessary in revisal to range the interests of the executive with those of the shareholders (Smith, Gambrell, & Russel , 2003, ¶ 5). Unfortunately, this is not always the case. Instead of devising the executive dependent on their stocks performance, it enables them to make tough persuasion calls. Stock options offer executives the opportu! nity to gain vast amounts of wealth without any of the drawbacks of penalties when the stock drops (loses money). In former(a) words, when the executive makes a bad business decision and the stock goes down, they will suffer no penalty to financial wealth. When their actions need no negative weight, they are not inclined to full point making these kinds of decisions which sack up lead the company down a road of...If you ask to get a full essay, order it on our website: BestEssayCheap.com

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