Your firm has been offering a combination of salary and stock options for employees. An entry level electrical engineer earns $75,000 plus $25,000 in stock options.
a) Your accountant tells you this is cheaper than paying him only in salary. Explain why he is wrong.
b) Aside from the expense, why do options not make sense for most employees at the firm?
c) On the contrary, why might options be a good form of compensation for the CEO?