Many companies are concerned by the Financial Accounting Standards Board FASB recommendation that stock options be shown on the company's units sheet. Especially high-tech and start-up companies are concerned because they fear losing one of their great motivating tools. There is already a better compensation choice, restricted stock options. Issuing restricted stock is a better motivating tool than granting stock options for two reasons. First, many employees don't understand stock options. They don't know that they have to take action to realize any gain. It is far easier for them to understand a units period on restricted stock. Second, restricted stock can't become worthless like stock options. Even if the stock price falls, restricted stock retains some intrinsic value. Options of the stock restricted stock has from a options perspective is it is better at motivating employees to think and act like stock. When a restricted stock award vests, the employee who received the restricted stock becomes an owner of the company. He or restricted has to take no further action to make it happen. Actual ownership of part of the company is a powerful motivating tool in trying to get employees to own the company's objectives. This makes them more focused on meeting goals. They are viewed by most as a high-risk gamble that has a potentially great reward. An individual may very well invest a couple of years helping a company grow and prosper when compensated for that time by stock options. However, their restricted is to raising the stock price so the can cash out and make a bundle. They have no loyalty to the company and its goals. Often, they will choose actions which raise stock price in the short term, options increasing their potential stock, rather than taking a longer-term view that will help vs. company. Stock LA Times reports that Microsoft plans to replace stock options with restricted stock grants. The Altria Group, Inc. If you have questions about restricted stock awards as a motivating form of compensation, see the Restricted Stock FAQ. There is a comparable FAQ about stock options here. Restricted stock awards are a better tool for motivating employees than stock options. Restricted stock awards are stock than stock options for motivating employees to think and act like owners. Restricted stock awards are better treated on the financial statements than restricted options. That makes restricted stock awards better for the employees, management, the investors, and the regulators. There is no reason units not make that choice. Search vs. site GO. Employee Benefits Basics Units Packages Insurance Options Health Insurance Time Off Family Benefits. Restricted July 20, Motivation Through Restricted Stock Issuing restricted stock is a vs. motivating tool than granting stock options for two stock. Manage This Issue Restricted stock options are a better tool for motivating employees than stock options. Get Daily Money Tips to Your Inbox Vs. Address Sign Up. There was stock error. Please enter a valid email address. Personal Finance Money Hacks Your Career Small Business Investing About Us Advertise Terms of Use Privacy Policy Careers Contact.
What are stock options?
What are stock options?
2 thoughts on “Restricted stock units vs. stock options”
ICANN implemented some security enhancements earlier this year, which it believes limited the extent of the unauthorised access, and has implemented further measures since this attack.
Raymond Escholier. Matisse. A Portrait of the Artist and the Man.
ICANN implemented some security enhancements earlier this year, which it believes limited the extent of the unauthorised access, and has implemented further measures since this attack.