Optimal Executive Stock Options on Different Stages of Enterprise
Date Issued
2004
Date
2004
Author(s)
Hung-Sheng, Lin
DOI
zh-TW
Abstract
Characteristics and key success factors of each stage during enterprise’s life cycle are defined systematically in this study. It provides owners of enterprises some easy and fast ways to ascertain which stage the enterprise is on by using the Characteristics Table. The Stock Options Ranking Table has also been created to assist owners of enterprises to easily and quickly choose the optimal Executive Stock Options (ESO) among standard stock options and six kinds of un-standard stock options, which had been brought up by Johnson & Tian(1999), when owners of enterprises tended to use ESO to encourage employees to reach the goals of the enterprises.
This study analyzes from the enterprise owner’s point of view, how to use as the expenses to increase one unit profit, to find out the influence of the decision made to issue ESO by analyzing and comparing among different P/E ratios, different capital scales, different stock market price levels, and different prospects of company owners, or even among different regulations and taxations which can also be valuable references to modifications of regulations and taxations.
Meanwhile, it uses to analyze the tendency and behaviors of enterprise owners whom oppose the trend of transferring ESO to be under the category of expense.
In conclusion, the Purchased Stock Option is the best during the seed stage and the start-up stage, while the Indexed Stock Option is the worst. By contrast, during the expansion stage and the well-established stage, the best one is the Indexed Stock Option, while the Repriceable Stock Option is the worst
It represents some positive relationships among the cost of issuing ESO and other factors. The higher P/E ratio, the more cost of issuing ESO. The more shares are issued, the less cost of issuing ESO, which is in a negative relationship. The better promising corporations will be opposed with more expenses for issuing ESO than that of corporations which have poorer future. The enterprise owners from firms with better expectation for corporation performances will be more against to put ESO under the category of expenses. It costs less for Enterprises with lower P/E ratios to issue ESO in order to maintain developed existing employees or to recruit potential employees from competitors than those who are with higher P/E ratios. It also costs less for issuing new shares than purchasing shares from currency market as ESO resources.
Futhermore, the table 4-1, Characteristics of various stages of enterprises, in this study offers Owners of enterprise good references to realize which stage their own enterprise is on. Another table 4-2, the table list of Optimal Executive Stock Options on Different Stages of Enterprise, helps owners of enterprise to make decisions when ESO is decided to be used as a tool for stimulation and enforcing employees, and to pursue ultimate benefits for shareholders.
Subjects
員工認股選擇權
員工認股權憑證
企業成長階段
成功關鍵因素
企業成長
員工選擇權
ESO
Executive Stock Option
Enterprise Life cycle
Stock Option
KSFs
Key Success Factors
Enterprise growth
Corporate Life cycle
Type
other
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