Share and share unlike
Article Abstract:
Stock options have become a popular form of payment among company bosses, and this has increased economic inequality. Stock prices and corporate profits have also risen in the US in the 1990s, though profits may not reflect the cost of stock option schemes. Stocks could have become overvalued since future profits have been overestimated. Companies have also borrowed to carry out stock buyback schemes. A number of factors that have helped companies to perform well, such as low interest rates, are unrelated to executive performance.
Publication Name: The Economist (UK)
Subject: Business, international
ISSN: 0013-0613
Year: 1999
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The trouble with share options
Article Abstract:
Stock options have become an increasingly popular way of rewarding executives, and this has led to pay inequality, which could affect the team spirit in comanies. It is also a cheap way to attract employees, though there could be problems when stock prices fall. Options could also dilute equity, and they may encourage executives to issue debt to buy back stocks which could make companies vulnerable in a recession. Options could be seen as expenses, and performance could be more strongly linked to options.
Publication Name: The Economist (UK)
Subject: Business, international
ISSN: 0013-0613
Year: 1999
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Comment about this article or add new information about this topic: