What is the primary purpose of offering an executive stock options in a compensation package?

Question

Quizplus · Accepted Answer

The primary purpose of offering an executive stock options in a compensation package is to encourage the executive to increase the firm's value. This aligns the executive's interests with those of the shareholders and motivates them to make decisions that will benefit the company in the long term. The executive can profit from the stock options only if the share price increases, therefore the executive has an incentive to work towards increasing the value of the company.

What Is the Primary Purpose of Offering an Executive Stock