Stock option programmes as a value orientated management instrument (ePub)

Seminar paper from the year 2004 in the subject Business economics - Business Management, Corporate Governance, grade: 1,3 (A-), Anhalt University of Applied Sciences (Master of Business Adminstration (HS-Anhalt)), course: Finance and Policy, language: English, abstract: Stock option programs (SOP) are known as a salary instrument for executives in companies.
They are established in the United States and became popular in recent years also in Europe.
This paper is concentrated on the use of stock option programs in German companies. Also it is
only concentrated on stock option programs for the management as an incentive to increase the
company performance. Stock option programs for employees became more common in the last
year, but they are not part of this paper.
Chapter 2 gives a definition of the agency theory and why incentives for the management are
necessary. An overview over stock option programs is also given. Both definitions are essential
for the rest of the analysis.
Chapter 3 explains detailed the advantages and disadvantages of the stock option programs. It
shows theory and what modifications are possible in the reality. Examples from different
companies like Daimler-Chrysler, SAP AG and Google Incorporation. are included to support. Tax
advantages through SOP and accounting rules that are connected with SOP are not part of this
paper, because the focus is to show how the stock options program can be used as an incentive
instrument for the management to increase the shareholder value.
Chapter 4 describes an optimal model for SOP as far as it is possible to develop a program that is
appropriate for different companies.
In chapter 5 it is examined on the basis of the results of chapter 3 and 4 how appropriate the
SOP of the company SAP AG is.
Chapter 6 summaries the work and gives an outlook for the future development.