The Advisors' Blog

– Pearl Meyer, Senior Managing Director, Steven Hall & Partners

In response to last week’s blog on mandatory stock option exercises, I would respond that the technique is useful, but for purposes other than those outlined. Requiring exercise and limiting appreciation without a clear corporate objective appears to contradict the grant’s purpose of motivating and rewarding the creation of shareholder value – and the more, the better.

I’ve used this technique, but to achieve a specific corporate purpose – such as to provide employees with the opportunity to earn the negative spread on underwaters while preventing double dipping and to limit the charge to earnings for an option grant.