Walter Maxim, the CEO of Digital Storage Devices Has Been

question 9

Essay

Walter Maxim, the CEO of Digital Storage Devices has been granted options on 300,000 shares. The equity is currently trading at £27 a share and the options are at the money.The volatility of the equity has been about .15 on an annual basis over the last several years.The option mature in 5 years, become exercisable in 3 years, and the risk free rate is 4%. If Mr.Maxim earned £500,000 in regular annual salary why might he prefer to have £1,500,000 in straight salary versus salary and options?

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Definitions:

Inexpensive

Characterized by a low cost that makes it easily affordable or represents a small financial outlay.

Self-Efficacy

A belief in one's ability to succeed in specific situations or accomplish a task.

Training Motivation

The drive and eagerness of individuals to participate in training programs, influenced by factors such as personal interests and perceived relevance.

Person Analysis

A process used in organizational training and development to identify the individual needs of employees, determining who needs training and what kind of training is necessary.