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This post addresses ecomics questions.

What is the logic of a firm setting and exercising the application of a mandatory retirement age? What are the pros and cons of the mandatory retirement practice from the perspective of the firm/organization, individual, economy, or Nation? How might your response change with time; i.e., as you age or as the discoveries, opportunities, and challenges of mankind continue to evolve? What affect might our concern for the baby boomers reaching retirement age, and the smallest number workers supporting the largest number of retirees drawing social security, have on our views regarding mandatory retirement. If the seniors are employed, they will be contributing to social security through their FICA payments.

Living employees company stock or stock options in lieu of pay increases has been popular in many companies. The employees often are not allowed to sell their stock (or exercise their purchase option) for at least one year after receipt, and must forfeit the stock if they quit or are fired within a specified waiting period. Discuss the pros and cons of stock bonuses in lieu of cash bonuses from the perspective of:

o the employee;

o the firm;

o the stockholder;

o the economy (the Nation).

Are there any upsides (benefits) or downsides (costs) to the economy from using stock or stock options as a form of compensation?

Solution Preview

What is the logic of a firm setting and exercising the application of a mandatory retirement age?

There are a few reasons for it. There are many firms who believe that once an employee gets older, their salary has likely increased, and they're paying more than they would for a middle-managerial position. If there is a mandatory retirement age, it saves the company money due to the salary difference. Also, when a person gets near retirement age, companies generally bring in young businesspersons with fresh, new ideas in order to keep the company's strategy current, young, and in-line with the competition. Companies want to ...

Solution Summary

The solution discusses issues relating to retirement ages and relates issues and also discusses stock options.

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