Which of the Following Is Incorrect Regarding Employee Stock Options

question 77

Multiple Choice

Which of the following is incorrect regarding employee stock options?

• A) It allows management to purchase shares at a fixed price over a period of time.
• B) It provides the manager with an ownership stake in the company.
• C) Options are meant to align the manager's and actions with shareholders' interests.
• D) Many believe management are already overpaid.
• E) Many believe management are underpaid and stock options will benefit pay.

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Definitions:

Residual Dividend Policy

A strategy where dividends paid to shareholders are based on earnings left over after all operational and investment costs are covered.

After-Tax Earnings

The net income of a company after all taxes have been deducted from revenues.

Par Value

The nominal or face value of a stock or bond, as stated by the issuing corporation.

Large Stock Dividend

A distribution of a substantial number of shares to a company's shareholders, often used to conserve cash while still rewarding investors.