New theory on fairness in economics targets CEO pay

(PhysOrg.com) -- Chief executives in 35 of the top Fortune 500 companies were overpaid by about 129 times their "ideal salaries" in 2008, according to a new type of theoretical analysis proposed by a Purdue University researcher ...

Apple CEO Tim Cook could top pay list in 2011

(AP) -- Tim Cook could well end up being the highest paid CEO in America in 2011, after Apple Inc. granted him a million restricted stock units last August for taking the reins shortly before co-founder Steve Jobs died.

Do stock options improve employee performance?

It has become an article of faith in Silicon Valley that stock options create incentives for employees to work harder and smarter. But does that assumption stand up? It depends on who is receiving the options, according to ...

Google rewards top executives

Google has awarded nearly $9 million in bonuses and another $50 million in equity to four top executives of the Internet giant, according to a filing with the US Securities and Exchange Commission.

Google awards $100 million to Eric Schmidt

(AP) -- Google Inc. says it has awarded $100 million worth of equity to Eric Schmidt, who is stepping aside as CEO but will stay with the company as executive chairman.

Oracle CEO Ellison's pay drops 18 pct to $78.4M

The value of Oracle founder and CEO Larry Ellison's pay package dropped 18 percent in fiscal 2013, to $78.4 million, after the company missed its internal financial targets and he declined his annual cash bonus.

Intel CEO gets $12.4M in 2008 pay

(AP) -- The value of Intel Corp. Chief Executive Paul Otellini's compensation package rose slightly to $12.4 million in 2008, a year in which the chip maker's profit was whacked by a global slowdown in personal computer ...

Broadcom settles securities class action lawsuit

(AP) -- Broadcom Corp. said Tuesday it will pay more than $160 million in cash to settle a class action investor lawsuit related to stock option backdating, but did not admit wrongdoing.

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Option (finance)

In finance, an option is a contract between a buyer and a seller that gives the buyer the right—but not the obligation—to buy or to sell a particular asset (the underlying asset) at a later day at an agreed price. In return for granting the option, the seller collects a payment (the premium) from the buyer. A call option gives the buyer the right to buy the underlying asset; a put option gives the buyer of the option the right to sell the underlying asset. If the buyer chooses to exercise this right, the seller is obliged to sell or buy the asset at the agreed price. The buyer may choose not to exercise the right and let it expire. The underlying asset can be a piece of property, or shares of stock or some other security, such as, among others, a futures contract. For example, buying a call option provides the right to buy a specified quantity of a security at a set agreed amount, known as the 'strike price' at some time on or before expiration, while buying a put option provides the right to sell. Upon the option holder's choice to exercise the option, the party who sold, or wrote the option, must fulfill the terms of the contract.

The theoretical value of an option can be evaluated according to several models. These models, which are developed by quantitative analysts, attempt to predict how the value of the option will change in response to changing conditions. Hence, the risks associated with granting, owning, or trading options may be quantified and managed with a greater degree of precision, perhaps, than with some other investments. Exchange-traded options form an important class of options which have standardized contract features and trade on public exchanges, facilitating trading among independent parties. Over-the-counter options are traded between private parties, often well-capitalized institutions that have negotiated separate trading and clearing arrangements with each other. Another important class of options, particularly in the U.S., are employee stock options, which are awarded by a company to their employees as a form of incentive compensation. Other types of options exist in many financial contracts, for example real estate options are often used to assemble large parcels of land, and prepayment options are usually included in mortgage loans. However, many of the valuation and risk management principles apply across all financial options.

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