Stock Options Continue, Despite Scandals
Finance → Stocks, Bond & Forex
- Author Adam Heist
- Published January 23, 2007
- Word count 415
The stock-option backdating scandal has hit over 150 companies nationally as of October 2006. The financial advisory firm Glass Lewis has said that over $10 billion is involved in the various companies charged with backdating stock options. The analysis was in Glass Lewis' weekly ``Trend Alert'' advisory.
Stock-options generally are a perfectly legal option for companies to reward their employees by giving them a discounted option to buy stock. The idea is to bind the employee closer to the success or failure of the company, and reward him or her for better performance, by being able to tangibly share in the company’s shareholder value.
Some companies choose to have broad-based employee stock option plans. These plans give most employees the right to participate. An employee stock ownership plan (ESOP) is a type of employee benefit plan. The company contributes its own shares to the ESOP plan and arranges for this to provide tax benefits for the company and its employees. Many of these plans involve companies that have not “gone public” and are closely held. Probably as many as 10 million employees in the United States participate in stock option plans. Other plans allow employees to buy stock through payroll deduction plans, through a substantial, 15 percent or more, discount. ESOPs from a legal standpoint are different from straight employee stock option plans, in that they are much more broad based. The scandals involving stock options involve leading executives who are allowed to buy stock at a price that has been dated in some cases years before the present, so they can make an immediate profit selling stock of over 50 percent.
A 401k plan involves stock ownership by employees, but in a diversified portfolio of stocks. Some of these plans include a matching plan where the employees pay over time for an amount of company stock for their retirement fund.
Stock options in various forms are a big time business. Take the case of Microsoft. Microsoft receives cash by issuing employee stock options, after which the company then receives billions of dollars in tax deductions. This can be pretty strange, but it is definitely significant. A large portion of the salaries that Microsoft pays out are in the form of stock options. These options allow employees to buy stock at a fraction of the market price. The employees only pay taxes on the portion of the stock price they pay that is discounted from the market price. Microsoft made over $5 billion off the stock market in one year, tax-free.
Having trouble finding the right information?
Well take a look at Adam Heist's website. Take a
quick look at kensington mortgage company right now, and
we are quite certian that you will not be let
down.
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- Is First Nexus Legit or SCAM? - Review of firstnexus.io
- Send Money to Tanzania: Effortless Transfers with SafariRemit
- Who owns the most Bitcoin?
- Fintechzoom IBM Stock: Powerful!
- Bitcoin FintechZoom
- Unraveling the Dynamics of High-Frequency Trading (HFT) Operations
- Memecoin craze: PepeTurk could be next
- How To Evaluate A Company Before Investing In Its Stock
- 5 Ways to Make Money from Stocks in 2023
- A Beginner's Guide to Forex Trading: Tips and Strategies for Success
- Understanding Currency Trading: A Beginner's Guide To How The Market Works
- A Recession Is When Your Neighbor Loses His Job
- Inflation Is Gas Powered
- The Failure Of Global Supply Lines
- California's Energy Crisis
- The Day Charles Schwab Bought Lunch
- Where to learn how to Trade Stocks for Beginners?
- Bank Guarantees BG and Standby Letters Of Credit SBLC
- Q3 2022 Investor Conference & Events Highlights
- IPOs and SPACs Come Full Circle as Liquidity Dries
- What is a Structured Settlement Annuity?
- Are you in Rat Race?
- Weimar America?
- Stock Loans: A great, safe alternative for listed companies and stockholders alike.
- IPCAPITAL:IPCapital's AIA BOT System is Transforming Forex Algorithmic Trading
- Insights on Where to Buy and Sell Bitcoin Instantly
- What Are Forex Signals?
- Investing In Stocks
- Blockchain strategies and approaches
- Why is it worth having your savings in a different currency?