Executive stock option plans backdating motivation sex dating in yewed oklahoma
This is not an example of the work written by our professional dissertation writers.Today's highly competitive world consists of numerous corporations and these corporations are so huge and so large that it cannot be controlled by the people who own them.Some managers do not take any action whatever state or condition the corporation may be as they are risk averse and fear the threat of losing their job if a decision taken by them goes wrong.Therefore in order to avoid the various problems that arise due to the agency problem, executives must be properly and promptly compensated along with proper monitoring.Between 19, the value of the options granted by firms in the S&P 500 rose from an average of million per company to 1 million per company (with a high point of 8 million reached in 2000).Over this period, CEO compensation skyrocketed, largely fueled by stock options.Principal is referred to the stockholders and the agents are the executives who work for the stockholders.
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.
The control of these corporations is separated from shareholders who are the owners and vested into the hands of professional executives who are specifically hired for its management.
This separation of ownership and control gave rise to agency problem or the principal-agent problem.
Stockholders have no right to inspect the books of accounts nor are they aware of the exact functioning and position of the firm.
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.