What are some of the ethical concerns raised by options? Are they such that options should be dropped, as Microsoft did, or are there ways of answering the concerns and defending the practice of giving options as fair and as a legitimate approach to worker and executive compensation?
Options (stock options plans) given to the employees, so that agency conflict is eliminated and everyone in the organization can work in the same direction and achieve organizational goals and wealth. Though, it can attract some ethical concerns as well. The first ethical concern is that it binds the employees to work in the given organization and demotivates them from opting other opportunities as he or she will be unable to excercise the option at the stated rates. Here, it is not morally right way to work as per the deontological approach of ethics. The second ethical concern is that it binds the funds for a period of time and funds are blocked that could be used for some other purposes if stock options could be sold as per the choice. It is unethical, as companies want to help employees gain, but blocks the selling of stock options for a period of time. The third unethical concern is that companies are running away from issuing cash benefits and instead of that, companies issue stock options where the price could come down also in the future. So, it is unethical.
Despite being some ethical concerns, such options should not be dropped, because it is the one of the method to build long term wealth creation. So, employees should be given the alternative of either choosing cash incentives or stock options and it should be packaged in a way that will make stock options to be very attractive.
The practice of giving stock options as a part of compensation is a good and effective practice that help to eliminate the agency conflict in the organization. It is a good strategy to bind interests of the people and executives with the interests of the organization. So, practice of stock options should be continued.
Microsoft stopped it, not because it started hurting employees, rather it was stopped due to soaring stock prices that could swell into bigger size of wealth as Microsoft is one of the top technology companies in the world.
What are some of the ethical concerns raised by options? Are they such that options should...
What are some of the ethical concerns raised by options? Are they such that options should be dropped, as Microsoft did, or are there ways of answering the concerns and defending the practice of giving options as fair and as a legitimate approach to worker and executive compensation? business ethics seventh edition richatd and george chapter 2
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