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Getting What You Pay For With Stock Options
As more companies decide to treat stock options as an expense, management has a clean slate to rethink their use as compensation and their role in aligning the interests of executives and shareholders. This article offers five principles to consider in redesigning a company’s approach to options.
The take-away: Companies should tie stock options compensation to individual performance and limit incentives for top executives to engage in risky behavior to drive up share prices. In this way, they will better align the interests of shareholders and management.
Articles provided by The McKinsey Quarterly
© 1992-2003 McKinsey & Company, Inc
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