Hello,

I just need someone to read over my answers and paraphrase and delete/added any unnecessary and/or necessary words.

I've already gotten answers but please proof read and correct grammars and sentences. I think the answers are too long.

It needs to be precise and short.

Here are the questions.

What are some problems with granting stock options to employees? Please describe at least two problems discussed in the article and explain why those problems may hurt shareholders interest.

-First, the article argues that the problem with this stock options are that there are too many options are given to too many people. Most options are given below the top-level position employees, often inefficient ways to attract, maintain, and motivate management and particularly to lower-level employees. Again, offering the stock options are inefficient means to attract at most times, maintaining, and motivating company employees, in many cases because the companys costs for stock options are often hedging risks and are more value-added to their options by in divergent workers. The attraction is the first of these goals, and both authors point out that companies that pay options instead of paying in cash compensation are effectively taking out loans from employees and are receiving their good services today in return for future payments. But people who are risk-averse, uncomplimentary employees are unlikely to become efficient capitalists, especially compared to banks, venture capitalists, and/ or other investors. For the same reason, the payment option instead of cash compensation affects the types of employees the company attracts. With this matter, options are highly motivating and can bring in entrepreneurial types, but they can only increase the companys stock value if its chief executives and other key figures are able to post shares. The majority of lower-level employees who offer the stock options can have a minor impact on share prices. With those reasons, stock options clearly facilitate employee maintenance, but in the article, both authors suspect other means of promoting employee loyalty could be more efficient, such as graduation pay increases, tuition assistance, bonuses etc- especially when not related to stock value, such as options are likely to promote employee retention and pay more attractive costs to the company, even if not better. And even to me, I strongly agree with Hall and Murphy that for the employees who are not in a higher position yet might want to get offers on the cash compensation and/or other sources of options then stock options. Because, I have noticed that many big companies pay more stock options to the higher-level position and many lower-level employees really dont understand the concept of stock option yet. I even wish that my current company can offer me with better education assistance and yearly bonuses rather than offering the stock options. In addition to that, compensation for Director or CEOs through stock options, as demonstrated by a number of recent corporate scandals, could lead to the temptation to inflate or artificially manipulate the value of stocks.

-The second problem in the article is the motivation. If 90% of stock options are given to the lower-level managers or employees, can option be seen or used as an efficient way to provide incentives to lower-level employees? In the article the authors states as that the offering a meaningful stock options to lower-level employees seems not true. Employees can hold a large portion of their assets firmly, but at best they can be given a small amount of unpaid stock; therefore, there is a free rider problem. Even if employees can enrich the value of the company, the benefits of choices are very small. Combining these large-scale free-rider problems with the risks posed to employees through stock-based payrolls makes it clear that combining them makes cash-based incentives more robust and provides scientific performance incentives based on objective or subjective performance measurements. For example, stock-based pay could help maximize shareholder wealth, increase employee morale, and ease corporate goals that encourage employees to participate in mutual surveillance, although we do not know the compelling empirical research that supports this claim. Note, this elegance has been certainly supported in the current bear market, as mutual surveillance incentives and option holder morale have plunged in share prices.

If granting stock options to employees is so inefficient, then why do companies grant options? According to the authors, what are some real reasons why companies grant stock options (discuss at least two of these reasons)?

-According to Hall and Murphy, even if stock options are inefficiently used or offered, the companies will continue to view stock options as affordable offer can give to the employees because they have no accounting costs and no cash spending. Also, the employees are motivated to be more productive to increase the stock value and stock options can strengthen the employer-employee relationship. Furthermore, when the option is exercised, companies often issue new shares to executives and receive tax credits for the spread between stock prices and even prices. This practice makes the options discern cost much lower than the actual economic cost. But both authors are arguing about that perception brings too many options to too many people as mentioned in the first question. From perceived cost perspective, options can be seen as an almost uneconomical way to attract, maintain, and motivate employees, but options can be inefficient from a cost perspective.

Thank you