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Stock Options and Compensation

Reference: DARDEN-F-1521-E
Number of pages: 5
Publication Date: May 2, 2007
Fecha de edición: Aug 5, 2015
Source: Darden University of Virginia (USA)
Type of Document: Technical Note

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Description

This note is a brief introduction to the logic and practice of using stock options to compensate executives. The Black-Scholes option-pricing model is used to estimate the value of option grants for a company. The note affords the opportunity to apply options valuation in the context of executive compensation, and serves as a companion to introductions to options that expose the reader to the Black-Scholes option-pricing model. A spreadsheet is available for student preparation of the case.

Keywords

Black-Scholes option-pricing model Executive compensation Options Valuation