Suppose your employer offers you a choice between a $5,000

Question: Suppose your employer offers you a choice between…

Suppose your employer offers you a choice between a $5,000 bonus and 100 shares of the company’s stock. Whichever one you choose will be rewarded today. The stock is currently trading at $63 per share.

Suppose that if you receive the stock bonus, you are free to trade it. Which form of bonus would you chose? What is it’s value?

Suppose that if you receive the stock bonus, you are required to hold it for at least one year. What can you say about the value of the stock bonus now? What will your decision depend on?

From a people management perspective, what advantages does the company gain by delaying your ability to sell the stock? Is there a cost to the company?

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jagguarpaw February 1, 2017 0 Comments