Question

Which of the following compensation proposals is most likely to be in the best interest of the company’s shareholders? A base salary of $500,000 plus a stock option package for 250,000 shares, with 20% of shares maturing at the end of each of the next five years A base salary of $500,000 plus perquisites worth $250,000 A base salary of $500,000 plus a stock option package for 250,000 shares that mature in six months

Answer 1

Answer:

A base salary of $500,000 plus a stock option package for 250,000 shares, with 20% of shares maturing at the end of each of the next five years

Explanation:

This options will force the employee to stay in the firm for at least 5 years

Also it will tie his contribution to the market share

So their interest will be alinged with the company's interest of increasing his value and project better earnings through the five years program.