Executive stock option plans backdating motivation youngstown ohio dating reviews
Certainly, option grants have improved the fortunes of many individual executives, entrepreneurs, software engineers, and investors.
As a result, executives tend to work inefficiently without even bothering to look for profitable new investment opportunities, as well as they may use the firm's assets for private purposes and also work to achieve their personal goals - all at the expense of the shareholders.
About four dozen companies, including 17 in the Bay Area, are now under investigation to determine whether they retroactively changed option award dates to a time when the stock price was low, thereby padding the value of the options.
An option gives a person the right to buy stock in the future at a fixed price -- usually the price on the date the option is granted.
Hall and Murphy argue that, in many cases, stock options are an inefficient means of attracting, retaining, and motivating a company's executives and employees since the company cost of stock options is often higher than the value that risk-averse and undiversified workers place on their options.
In regard to the first of these aims - attraction -- Hall and Murphy note that companies paying options in lieu of cash effectively are borrowing from employees, receiving their services today in return for payouts in the future.