Many companies favor stock-based compensation plans to entice, retain, motivate, and attract their employees. These stock- and performance-based plans have remained a key component of executive pay. The plans allow employees to benefit from the potential upside of an equity investment while they participate in the downside risk. Such plans provide value for the investor/owners as they align pay, performance, and overall company value. They may give employees the option to buy stock at a discounted price, be directly granted company shares, or receive dividends or increases in the value of shares.
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