Stock options are a long-term incentive tool that aligns executive interest with shareholder value and overall corporate performance. Executives are motivated to improve financial performance because their personal gains are tied to stock price growth.
Extract from HRCI-aligned HR knowledge (Total Rewards domain):
The SPHR emphasizes “executive compensation structures such as long-term incentives that link financial results to reward.” Stock options, restricted stock units (RSUs), and performance shares are common strategic tools to link organizational success directly to leadership accountability.
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