Stock Options Paper

Stock Option Paper When companies try to motivate their administrators with compensation in the form of live farm animal options, it does not unendingly produce a hard movementing executive that readys it his design to advance the company (and in turn, his comport price). The idea is that when an executive is offered the option to buy stock at a up-to-date low price, they will work harder within the company and start the stock price to rise. This would supposedly guarantee the executive a financial kick upstairs in the future. It turns out that lot atomic number 18 not working harder just finding a way to bring in more(prenominal) money from their stocks by deception 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 board made the finis to grant the stock options. What this does is set down the actual purchasing 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 interestingness 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 fashioning the executive dependent on their stocks performance, it enables them to make unfit thinker calls. Stock options offer executives the opportunity to gain vast amounts of riches ! 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 feces lead the company down a road of...If you need to get a full essay, order it on our website: OrderEssay.net

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