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Are employee stock options good for shareholders?

Tong Kooi Ong
Tong Kooi Ong11/6/2017 08:00 AM GMT+08  • 6 min read
Are employee stock options good for shareholders?
(Nov 6): Much has been made of the benefits of long-term incentive plans such as stock options.
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(Nov 6): Much has been made of the benefits of long-term incentive plans such as stock options.

The Center on Executive Compensation in the US argues that long-term incentives encourage the achievement of a company’s strategic objectives to enhance value. This is because these incentives ensure alignment with shareholder interests. In the US, long-term incentives such as stock options often form the largest component of executives’ compensation.

This widely held view is often promoted by management consultants to earn their fees and company’s management to further their compensation. Indeed, many regulatory authorities similarly promote long-term incentive plans as part of “good governance”.

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