Abstract
This article reviews the factors underlying the phenomenal growth of stock options, discusses the implications for options in today’s economic and political environment and suggests possible actions for addressing these implications. Stock option popularity soared over the past decade as a form of compensation not only in the United States but also around the world. A number of forces appear to be converging that may castigate stock options. The net result is a reexamination of stock options and the role options should play in compensating employees. Although the future of stock options remains unclear, companies have a unique opportunity to take actions now to ensure future long-term success. Charting this course involves fresh thinking about where the organization wants to be and a candid assessment of where it is now. Effective compensation program design is an evolutionary journey, one that needs to be sufficiently flexible to adapt as the organization moves through its metamorphosis while responding to external realities and developments.
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