At the recent shareholders' meeting, the CEO of a small bank proposed a plan to offer each of its employees 250 incentive options for Class A common stock. The key provisions of the plan are that employees must exercise the options between January 2004 and December 2007, and if an employee terminates his or her employment with the bank (or is terminated), the options are no longer exercisable. One shareholder feverishly objected to the plan, claiming that such a move would dilute the value of the outstanding shares. As CEO, how would you defend the stock option plan to the shareholders?
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Though stock option involves dilution of ownership, it is the best way handling agency problem and rewarding employees. Stock option involves giving right to an employee to buy certain number of shares at a fixed price for specified period. It is more than dilution, it is sharing of ownership to achieve goal ...
Solution Summary
This explains the importance of stock option plan.
... The dividend yield variable is important to the value of an ... paid will lower the price of underlying stock and therefore lower the options price will ...
... 1.Stock price Stock price plays an important role when ... K + call option cost) If you think the stock is going ... you should short or sell the call options. ...
... holders or the right to buy stock for a ... an investor, diluted earnings per share is more important. ... On one hand, everyone holding options, warrants, convertible ...
Were any stock options exercised? ... The amount of repurchasing of the common stock was $6591 for the ... It is the most important component of the company because it ...
...Important morale problems can occur when employees think that the CEO is overpaid. ... and bonus payments, as well as gains from the exercise of stock options). ...
... Why it is important for managers to determine the value of real options in the capital budgeting decisions? ... 3) Why do firms issue stock dividends? ...
... with the basics of financial options, you have ... sell underlying financial asset (such as stock or currency ... The single most important characteristic of an option...
... are using these standards also have an important role ... dating, wherein companies back dates their stock options such that volatility in the stock price can ...
... The Stock Options were exercised in the Landry's Restaurant ... The amount of the stock option exercised was $1.8 ... financing activities as the important components. ...
... found out that companies have been backdating their options. ... grant measurement date, which is an important data in ... as reflected in the stock options reflect an ...
