It was front-page news when Microsoft announced early in July that it was shutting down its options program and planning instead to award employees shares of stock. To many corporations, especially technology firms, the move smacked of heresy. Options, they say, are the best way to motivate employees and lure top talent. Critics, however, believe options fueled the corporate scandals of the past few years and argue that they actually undermine corporate performance. While neither side seems to be backing off, observers suggest that widely-expected changes in accounting rules may be what finally decides the issue.
Editor’s Note: while a topical article, the basic look of stock grants vs. options is worthwhile to the novice as well as a couple of other topics raised (e.g. dividend tax rate cut).