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Question
The Board of Directors of CyberScope, Inc., is designing a stock option plan for its CEO that will motivate the CEO to increase the market value of the firm. Consequently, the Board is:
a. setting the option strike price substantially higher than the current stock price.
b. insuring that the strike price value of the options can be lowered if the organizational environment becomes more risky.
c. having the stock option plan designed by insiders on the Board of Directors who are familiar with day-to-day operations of the firm.
d. consulting accounting advisors to make sure that the plan transfers wealth to the CEO without immediately appearing on the balance sheet of CyberScope.
Answer
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