Study on share option schemes

• Main Authors: Ong, Doreen Chay Lu, Chan, Esmond Chin Hwa, Ng, Peter Kee Choon
• Other Authors: Wendy Foo
• Format: Final Year Project
• Language: English
• Published: 2015
• Subjects: DRNTU::Business
• Online Access: http://hdl.handle.net/10356/64537
• Institution: Nanyang Technological University

This final year report analyses the operation of the Share Option Schemes. The study probed into the fundamental reasons why these companies considered and adopted these schemes, the characteristics of these companies and the perception of the executives with comparisions made to other compensatory benefits. SOS is gaining popularity in the recent years among the local listed companies. The reasons why SOS has been adopted include improving the companies' abilities to attract, retain and motivate employees and tying the employees' financial interests to the long term success of the companies. Currently, there are 45 listed companies in Singapore with SOS. These companies are from various sectors and not restricted to a particular size. To ascertain the employees' perception of the SOS, questionnaires were sent to the beneficiaries from 12 of the 45 companies. Majority of the respondents commented on the inadequacy of the SOS as a montary compensation. However, most of them felt that SOS is a source of motivation in terms of recognition of being included in the scheme. In spite of the gaining acceptability in Singapore, the SOS has drawbacks which include moral hazards of key employees, burden of holding costs and the volatility of the equity market which affect the level of monetary compensation. Certain revised schemes are emerging in the United States which attempt to remedy some of these drawbacks of the traditional SOS. However, the effectiveness of these variations may only be known in the future when more companies adopt them.