The Resurgence of Management Stock

Activity in management incentive securities is growing with the increase in leveraged buyouts. Such management stock is a separate class of stock, with fractional voting and liquidation rights and restrictions on sale and transfer. Much of the stock's value comes from its potential for signific...

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Bibliographic Details
Published in:Management review (Saranac Lake, New York) New York), 1986-06, Vol.75 (6), p.57
Main Author: Much, Paul J
Format: Magazinearticle
Language:English
Subjects:
Employee stock ownership plans
ESOP
Executive compensation
Incentive plans
Stock purchase plans
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Summary:Activity in management incentive securities is growing with the increase in leveraged buyouts. Such management stock is a separate class of stock, with fractional voting and liquidation rights and restrictions on sale and transfer. Much of the stock's value comes from its potential for significant ownership in the company, if performance goals are reached by certain times. The stock offers management handsome rewards for high-level performance, and it can be structured to give these benefits only if management remains with the company. In order to be fair to current shareholders, management stock must be valued properly and structured carefully. Performance goals should be tough but still realistic. Management should be at some, but not too much, risk. The initial value of management stock is based on 3 factors: 1. base investment value, 2. specific performance goals, and 3. restrictions on sale or transfer.
ISSN:0025-1895