« FP Letters to the Editor: Small firms need options as incentives »

« Re: “Stock Options Under Attack,” Barbara Shecter, May 23

Rewarding executives with stock options may be a mistake in some circles, as claimed by the Institute for the Governance of Private and Public Organizations, but they are essential tools to attract and retain skilled management in many small and medium-sized enterprises (SMEs).

Companies that have yet to generate enough profit to compete for top talent with cash remuneration can provide incentives for employees at all levels through stock options. Concerns about short-term horizons and decisions driven by the immediate expected impact on the company’s share price can be mitigated by the judicious use of vesting and hold periods.

There are many issues surrounding executive compensation and overuse of stock options is just one of them. Eliminating them altogether won’t resolve the fundamental problems cited in the article with respect to “social trust, loyalty and reciprocity,” but it will make it much more difficult for SMEs to create sufficient incentives for senior executives or managers to join companies that have yet to realize their full potential.

Robert Cook, president, CNSX ­Markets, Toronto » … Read more