Benefits Of A Program Programs Rewards Employees For Poor Performance ( P. 424 )

719 Words Nov 9th, 2015 3 Pages
employees and encourage them to stay with the company, though many argued that the repricing program initiatives rewards employees for poor performance (p.424). I agree that for the companies or executive the advantages surpass the disadvantage on stock option compensation package grant tied to company performance, however for average or lower level employees who are in the mercy of the key executive’s business decisions. Employee stock option provide advantages to companies such as ability to attract highly motivated and entrepreneurial executives and the capacity to hire and fulfill incentive without draining earnings or company’s equity or spending cash. Obviously, employee stock option benefit companies at it provides tax benefit and no accounting cost, while encourages executives to act in shareholder’s interest and risk taking or aggressive business decision for substantial return and favorable stock price. However, the risk cause by executives manipulating stock price and making wrongful investment decision can’t be ignored as well, as executives could manipulate stock price through fraudulent earnings to deceive investors and the market, then when stock price is at peak, executives exercise their stocks option leaving the company stocks underwater, which I do think what happen with Cendant Corp. Weld et al. (2004) research titled “Anatomy of a Financial Fraud” regarding a forensic examination of HealthSouth (p.44). Weld summarized that according to…
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