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Walter Maxim,the CEO of Digital Storage Devices Has Been Granted

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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 why might he prefer to have £1,500,000 in straight salary versus salary and options?

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Definitions:

Hydrogen Ions

Positively charged ions (protons) that play an essential role in many processes, including the pH regulation of bodily fluids.

Osteocytes

Mature bone cells that maintain the mineral content of the bone and help to regulate calcium and phosphate concentrations.

Maintenance Cells

Cells that perform routine repair and maintenance tasks within tissues, keeping them healthy and functional.

Osteochondral Progenitor Cells

Cells that have the potential to differentiate into osteoblasts or chondrocytes, contributing to bone and cartilage formation respectively.

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