Stock Options Paper

Stock Option Paper When companies try to motivate their administrators with allowance in the form of live farm animal options, it does non unendingly produce a hard movementing executive director that readys it his final stage to advance the company (and in turn, his air price). The idea is that when an executive is offered the option to buy stock at a electric current low price, they will work harder within the company and pee the stock price to rise. This would supposedly guarantee the executive a financial kick upstairs in the future. It turns out that lot be not working harder just finding a way to bring in more(prenominal) money from their stocks by misrepresentation 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 befo re the date the board made the close to grant the stock options. What this does is set down the actual get 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 endorse in the company is necessary in revisal to coordinate the interests of the executive with those of the shareholders (Smith, Gambrell, & Russel , 2003, ¶ 5). Unfortunately, this is not always the case. Instead of reservation the executive dependent on their stocks performance, it enables them to make tough creative thinker calls. Stock options offer executiv es the opportunity to gain vast amounts of ! wealthiness 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 post lead the company down a road of...If you pauperization to get a full essay, order it on our website: OrderEssay.net

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