The Board of Directors of Wireless,Inc

question 15

Essay

The board of directors of Wireless,Inc.is considering two compensation plans for the CEO of the company.The first would pay the CEO a salary of $250,000 for the upcoming year.The second would pay the CEO a salary of $100,000 and provide the CEO with a stock option to buy 100,000 shares of stock for $11 per share.The current price per share of Wireless,Inc.stock is $10 per share.The stock option expires at the end of the year.Why might shareholders prefer the second payment plan? As part of your answer,calculate the breakeven point for the CEO to obtain the same compensation under option two as he or she would under option one.

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Definitions:

Sensorineural Hearing Loss

A type of hearing loss resulting from damage to the inner ear or the neural pathways from the inner ear to the brain.

Cochlea's Hair Cells

Sensory cells located within the cochlea of the inner ear, responsible for converting sound vibrations into electrical signals for the brain to interpret as sound.

Auditory Nerve

A component of the auditory system that transmits sound information from the cochlea in the inner ear to the brain.

Cochlea

A spiral-shaped, fluid-filled tube in the inner ear that plays a key role in the process of hearing by converting sound vibrations into nerve impulses.