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Stock Options and Compensation

Harris, Robert S.,...

Technical Note

Stock Options and Compensation

Harris, Robert S.; Conroy, Robert M.

F-1521 | Published February 5, 2007 | 5 pages Technical Note

Collection: Darden School of Business

Product Details

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.

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