StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Option Grants Draw Scrutiny - Essay Example

Cite this document
Summary
In the following paper “Option Grants Draw Scrutiny” the author analyzes the article about the criticism that the executives of target companies in a merger-acquisition deal are provided with large stock options right at the time the deal gets confirmed…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER92% of users find it useful
Option Grants Draw Scrutiny
Read Text Preview

Extract of sample "Option Grants Draw Scrutiny"

The grants of the shareholders are affected in two ways, one being positive to them, the other in a negative way. The shareholders can be deprived of their share value with the dilution of its cost by providing extra shares to officers. Or, they can benefit from the incentives that are obtained through the merging with other companies. The executive officers, due to the extensive revenue they get through takeover bids promote mergers and acquisitions in a large way. Examples of such merger acquisition done in the past two years include the taking over of Marvel pictures by Walt Disney, where the CEO reaped $34 million in cash through selling stock options.

The allowance of providing pre-deal options to executives is termed as a selfish act by critics and is compared in terms with another activity considered to be controversial, “SpringLoading”. Though the details were discussed with the SEC, they have declined to take any direct action against it except for ruling that the acquiring companies have to show their annual proxy statements. As the article suggests, the executives convert their options to shares as soon as the deal closes out.

This was discussed in the chapter on how the executives “reprice” stock values so that their shares do not get affected in case of any loss. The basic idea of stock options was to motivate the employees as mentioned by EDS in the article, "to motivate executives to achieve long-term goals designed to create sustainable shareholder value and reward them to the extent they achieve such goals." (Maremont) But the current reports are in direct contrast as to how the executives use up the stock options for individual profit.

The article provided a practical knowledge of whatever that was discussed in the course materials. The article was directly related to the stock options, their purpose, and their way of usage. The article gave a clear explanation of the executives use the stock options to their benefit, what is the profit they gain from it and what is the effect of it on shareholders and share market. The article also provides a possible solution on how to overcome this scenario and make the use of stock options in a positive way.

The article has given a great insight into the dealings and discussions that goes off the record in a merger acquisition scenario that can be greatly useful in aiding further understanding of the course.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Option Grants Draw Scrutiny Essay Example | Topics and Well Written Essays - 500 words, n.d.)
Option Grants Draw Scrutiny Essay Example | Topics and Well Written Essays - 500 words. https://studentshare.org/management/1558413-wall-street-journal-article-summary
(Option Grants Draw Scrutiny Essay Example | Topics and Well Written Essays - 500 Words)
Option Grants Draw Scrutiny Essay Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/management/1558413-wall-street-journal-article-summary.
“Option Grants Draw Scrutiny Essay Example | Topics and Well Written Essays - 500 Words”. https://studentshare.org/management/1558413-wall-street-journal-article-summary.
  • Cited: 1 times

CHECK THESE SAMPLES OF Option Grants Draw Scrutiny

The military, War and Terrorism

The question under scrutiny is whether it is more beneficial for a nation to spend more on military or spend more for other purposes.... Military War and Terrorism For several years debate over military spending has been taking place.... The question that concerns all is that whether high military spending is good or bad for the economy and the society of United States....
3 Pages (750 words) Research Paper

Marketing: Brands Creating Shared Value

For example, the capitalist system is currently under scrutiny due to its nature.... Marketing: Brands Creating Shared Value Name Tutor Institution Course Date Brands Creating Shared Value Introduction One of the key problems that is experienced in our societies is the based on how business is carried out....
6 Pages (1500 words) Assignment

Primark- Between Affordability and Ethics

However, the corporate practices of Primark do leave scope for ethical scrutiny.... Primark is a budget clothing retailer that has an official code of ethics.... The company requires its suppliers to stick to ethical labour practices while manufacturing its products.... hellip; Primark- Between Affordability and Ethics....
6 Pages (1500 words) Essay

Stock Options Encourage Managers to Maximize Shareholder Value

Options not exercised by a date specified in the option contract will expire.... A firm's motivation in implementing a stock option plan includes increased employee productivity, the attraction and retention of valuable human capital, reduction of short-run compensation costs, increased cash flows, and higher levels of book income.... Consequently, the stock option value is uncertain at the time of grant....
10 Pages (2500 words) Essay

Financial and Marketing Strategy

(b) Another alternative to patent the idea then licence the product to an existing manufacturer would be the most viable option.... Well, in the event that they manage to do this, this would be the best option of all since they would have overall responsibility of their product and would be in full control of the whole business....
5 Pages (1250 words) Coursework

Tim Hortons in India

The company has grown by leaps and bounds to become one of the largest quick service restaurant (QSR) chains in Canada.... Tim Hortons has always focused on providing highest quality fresh food at reasonable prices to its… The chain is also well known for its top-notch service and community leadership. The first Tim Hortons restaurants offered only coffee and donuts....
14 Pages (3500 words) Coursework

Developing Successful Mobile Payment Technologies

Technology adoption has been scrutinised by researchers for decades, still the ambiguous nature of the concept has left researchers far from a unanimous agreement.... One of the most recent attempts to integrate streams of technology adoption literature has resulted in a model that… essentially brings the research back to its origins, demonstrating that understanding why people accept or reject technologies is a challenging issue....
106 Pages (26500 words) Essay

A Doctrine of Administrative Unreasonableness

The paper "A Doctrine of Administrative Unreasonableness" discusses that an administrative decision would be deemed as unreasonable if it is so unreasonable that no reasonable authority could have ever reached it.... This sounds very pompous but in effect is nothing but a tautology....  … In Meadows -v- Minister for Justice Equality and Law Reform Irish Supreme Court had to deal with several issues that related to human rights, refugee and other issues....
11 Pages (2750 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us