Employee Stock Options in Germany

This item is printed on demand - it takes 3-4 days longer - Neuware -Master's Thesis from the year 2003 in the subject Business economics - Investment and Finance, grade: 1,0, Tilburg University (Economics and Business Administration), language: English, abstract: Inhaltsangabe:Abstract:Companies located all around the world increasingly utilize stock options as a means of compensation for employees. Despite their widespread use it is still unknown why employee stock option plans are adopted, how their effectiveness is defined, and what influences their effectiveness. This master s thesis reports on an exploratory study undertaken on a sample of employees of the German IT company Network Appliance GmbH intended to answer exactly these questions.The aim of this study was to explore in an in-depth, descriptive fashion, the perspectives of employees receiving stock options as part of their compensation as they are as participants in the process - best situated to provide insights into the practical implications on the use and effectiveness of employee stock options. The qualitative methodology of the study allowed for the opinions and experiences of the employees to be heard and a rich picture of their perceptions on employee stock options was attained. The qualitative content analysis revealed a number of goals, which are associated with employees perceptions on why employee stock options are a part of their compensation, and which factors influence these goals effectiveness. An exploratory model of the use and effectiveness of employee stock options has been deducted from these findings, which enables managers and researchers to obtain a better understanding of this means of compensation.Even though research on compensation structures is typically explained by agency theory, the findings of this thesis suggest that no single theory provides a comprehensive explanation of the use and effectiveness of ESOs. Although the existence of a gap between employee and shareholder interests may lead some companies to adopt an employee stock option plan as suggested by agency theory, it is unlikely to be the only reason. Reality seems to be more complex than anticipated by guiding theory in this stream of research, therefore this study suggests that several theoretical frameworks complementing each other, such as human resource management, social exchange, tournament, social comparison, expectancy, managerial discretion, an institutional theory, are needed to fully grasp the use and effectiveness of employee stock options.Inhaltsverzeichnis:Table of Contents:Management SummaryIIReferencesIIITable of ContentsVIII1.Introduction11.1Introduction11.2Problem indication11.3Problem21.4Research questions21.5Structure of the thesis32.Employee stock options42.1Introduction42.2What are employee stock options 42.3Types of ESOs52.4Origins of ESOs62.5ESOs in international markets72.6ESOs in the German market92.7The fiscal situation for ESOs in Germany92.7.1Taxation of the employee102.7.2Tax deduction in the company102.8Case study Network Appliance112.8.1ESOs at Network Appliance GmbH122.8.2Outline of the stock option plan122.9Conclusion133.Theories explaining the use of ESOs153.1Introduction153.2Agency theory as the traditional explanation153.2.1The two typical agency problems163.2.2Agency theory and ESOs173.3Non-traditional explanations183.3.1Human resource management theory183.3.2Social exchange theory193.3.3Tournament theory203.3.4Social comparison theory213.3.5Expectancy / Managerial discretion theory223.3.6Institutional theory233.4Conclusion234.Research design254.1Introduction254.2Research method254.3Sample of participants264.4Data collection264.5Operationalizati. 92 pp. Englisch.…