Growing Shareholder Value: Why Executive Stock Ownership Works

Abstract

Direct stock ownership among U.S. executives has increased substantially over the last decade. Owning stock outright, in additon to receiving stock option, is essential for executives to balance some of the excessive risk-taking that might be engendered by option alone. Stock purchase or acquistion plans are extremely helpful in achieving ownership targets tah many companies set. Research shows that high level of executive stock onership are liked to high level of company perfoance. However, it is importat to note that rising levels of executive stock ownership do pose risk for the executives themselves. in spite of potential pitfalls, the author contends that rising level of bothe executive and all-employee stock ownership have a positve impact of company perfomance.