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Goodmans Publications

Rethinking Stock Options

October-10-2003

Area Corporate Finance and Securities, Tax

Summary


In recent months, a significant number of public companies have started to re-examine the use of stock options as a means of compensating their employees. Many are considering replacing their stock option plans with plans providing for outright grants of restricted stock. This process has largely been the result of the downturn in public stock markets, resulting in employees holding “underwater” stock options that are not fully effective as an employee incentive. In addition, the mounting pressures on companies to expense stock option benefits have also affected companies’ decisions to review their stockbased incentive programs.




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