What is a nonqualified stock option, how and why is it used to compensate executive management?

Jun 25th, 2016
SKTFaker
Category:
Art Design
Price: $15 USD

Question description

SEE "DOCUMENT 1" FOR CRITERIA 2 "DOCUMENT 2" FOR CRITERIA 4.

  1. You are to write a 2 page paper following APA rules for the title page, citations and appropriate references within the body of the paper. The minimum number of content pages is 2 and the maximum is 4 for the two issues noted in “a” and “b” below.
  2. Locate the following research article using the OCLS and EBSCOhost referenced below: 

Graham, J. R., Lang, M. H., & Shackelford, D. A. (2004). Employee Stock Options, Corporate Taxes, and Debt Policy. Journal of Finance, 59(4), 1585-1618. doi:10.1111/j.1540-6261.2004.00673.x

  1. Your paper is to address the following:
    1. What is a nonqualified stock option, how and why is it used to compensate executive management? You may use other sources, however, you must reference and cite them. Also, remember to reference and cite the textbook.
    2. The author’s research indicates that by using stock options, corporations that trade on NASDAQ can reduce their estimated median marginal tax rate from 31% to 5%. Using information from the article, explain how these corporations use stock options to reduce their marginal tax rates.
  2. In a page following your reference page, use the Accounting Standards Codification to locate the section which discusses accounting principles relevant to stock compensation. Next access the overview and background subsection. Copy subsection 05-3 and paste to the page. Also, properly cite this code section.
  3. Go towww.irs.govand search for Publication 525. Use the Index located at the back of the publication to find the section on "stock options, nonstatutory." Next, select the "exercise or transfer" of option. Copy the section titled "Transfer in Arm’s Length Transaction" to the page. Include a citation of the source.

Document 2.docx

Document 1.pdf

Tutor Answer

(Top Tutor) Daniel C.
(997)
School: UT Austin
PREMIUM TUTOR

hello, here is the complete answer with the available information. I am looking forward to hear from you.regards

Running head: NONQUALIFIED STOCK OPTION

Nonqualified stock option
Name:
Institution:
Course:
Date:

1

NONQUALIFIED STOCK OPTION

2

Nonqualified stock option
Nonqualified stock option refers to a type of the employee stock option where an
individual pays ordinary income tax on the variance between the grant price and price at which
option is exercised (Kahle&Shastri, 2005).
How and why nonqualified stock option is used to compensate executive management
Compensating executive employees by use of the stock options enable the workforce to
have a share of the company’s growth via the provision of the actual avenue for becoming part of
the ownership. Limited and liability companies, partnerships and corporations may use stock
options. The given date by which the organizations provides the executive employees with the
contractual right of purchasing the stock at a stated p...

Studypool has helped 1,244,100 students

Summary
Quality
Communication
On Time
Value
kpcutie
Mar 21st, 2017
" Excellent job "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1824 tutors are online

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors