I) i. In recent years, companies have shifted drastically to granting restricted stock in lieu of stock options as the primary form of non-cash compensation. Companies prefer this plan because it brings more certainty than options to their employees, and the accounting for RSUs is much easier. Employees’ preference will depend on how much risk an individual employee will accept. More risk-prone employees will prefer options, as they are worth nothing if the market is trading below the stock price, but they also provide the greatest opportunity for a large return. Employees who favor less risk would prefer restricted stock, as it has a guaranteed value, although it doesn’t have as great a potential for a large return that options do. ii. Xilinx’s footnotes indicate that their stock-based compensation plan is consistent with the Wall Street Journal article. From 2010-2013, Xilinx’s outstanding options dropped from 31,026 to 12,753 in only three years. During that same time period, the number of restricted shares outstanding rose from 3,652 to 5,996. These numbers indicate that Xilinx is shifting to a plan that favors RSUs instead of options.
I) i. In recent years, companies have shifted drastically to granting restricted stock in lieu of stock options as the primary form of non-cash compensation. Companies prefer this plan because it brings more certainty than options to their employees, and the accounting for RSUs is much easier. Employees’ preference will depend on how much risk an individual employee will accept. More risk-prone employees will prefer options, as they are worth nothing if the market is trading below the stock price, but they also provide the greatest opportunity for a large return. Employees who favor less risk would prefer restricted stock, as it has a guaranteed value, although it doesn’t have as great a potential for a large return that options do. ii. Xilinx’s footnotes indicate that their stock-based compensation plan is consistent with the Wall Street Journal article. From 2010-2013, Xilinx’s outstanding options dropped from 31,026 to 12,753 in only three years. During that same time period, the number of restricted shares outstanding rose from 3,652 to 5,996. These numbers indicate that Xilinx is shifting to a plan that favors RSUs instead of options.
Honors%20thesis%20APD.docx