Word: optionals
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...into 600,000 shares of common stock at $5 a share. The week Cottier s folded the stock sold for around $5, currently sells for about $25. In the novel Ridge Warren (who little resembles Collier's Chairman-President-Editor Paul Smith) has a potential million-dollar stock option himself and is constantly torn between profit and principle...
...stock option is as old as U.S. industry itself, but it was not until 1950 that it began to be widely used. Then Congress for the first time specified that if 1) a stock option was at least two years old, 2) it was granted at no less than 95% of the stock's market price, and 3) the stocks so purchased were held for more than six months, the profits would be taxable at long-term capital-gains rates (maximum 25%) instead of higher ordinary-income rates...
...Taxes," as Inland Steel Vice President William Caples says, "are the main reason for the existence of stock options." For it is only with a stock option that a company executive in the 50% tax bracket can hope to keep more money than he pays the Government. Today, an estimated 60% of the companies listed on the New York Stock Exchange offer executive stock-option plans...
Primarily, options are offered to spur initiative and give professional managers a sense of ownership. Says Leland Hazard, director of the Pittsburgh Plate Glass Co.: "The stock option is an invitation to aggressiveness. It gives a man the incentive to act as an owner-manager...
...option is also one of the strongest cords to tie a man to a corporation. At General Motors Corp., key executives are given cash and stock bonuses, plus options to buy G.M. stock based on the amount of their bonuses. Few leave for other firms because if they do they must forfeit their options and must also give up a big part of their bonuses, which are paid out over a period of five years...