Andrew Westbrook, a 15-year veteran in the consulting industry, is an assistant vice president of marketing for Titan Consulting, the second largest consulting company in the United States. As part of his compensation package, he has received stock options in the company over the years. Because Titan has grown rapidly during his time there, Andrew (along with many others at the organization) has reaped a great deal of benefit from the stock options he has received, even as an assistant vice president.Like many companies, the value of Titan stock has decreased substantially over the past few years. The majority of Andrew's options entitle him to purchase stock for $22 per share; Titan's stock currently trades at $15. The ongoing global recovery is expected to continue to weigh on Titan's results; the company (and its stock) is not expected to grow much in the short-to-medium time horizon. Titan policy prevents Andrew from selling his stock until he leaves the firm.

1. When growth is high, extending stock option grants to lower levels of the organization as Titan did is likely to __________.

A. garner favorable tax treatment in the current year for the individual employee

B. be highly motivating to lower-level employees because they will perceive that they have a great effect on the organization's results

C. enable employees at all levels to share the organization's growth, increasing attachment to the organization

D. make lower-level employees think like owners to a larger extent

E. garner favorable tax treatment for the organization

Same case as above

2. The fact that Andrew cannot sell his shares until he leaves the organization is likely to _______.

A. enable him to better plan his retirement

B. encourage him not to leave the company during a scandal

C. have little effect on his motivation

D. make the program more motivating

E. decrease the motivation potential of the program for him

3. One reason why Titan might be less likely to grant employees like Andrew stock options in the future is that ________.

A. academic research suggests that stock options are ineffective motivators for executive employees

B. Andrew's stock options are taxed more heavily now than was the case in the 1990s

C. customers are upset at executive pay, and stock options will cause Titan to lose business

D. recent scandals about ethics have drawn attention to stock options

E. Andrew's stock places him in a higher tax bracket that his firm must match