Aligning Shareholder And Manangement Interests

The use of options to better align management and shareholder interests has come under fire since management can often receive huge sums when the options are sold. Recently, it appears that the use of stock options as a management bonus is decreasing while the use of restricted stock is increasing. Restricted stock are shares of stock that are transferable only when certain restrictions have been met. These restrictions are often EPS targets, stock price increases, or tenure at the company. Shareholders appear to be favoring restricted stock because it allows for employees to benefit from stock price increases, but limits the potential gains.