Employee Share Option Scheme And Employees’ Motivation

Employee stock options scheme (ESOS) is a call option on the ordinary share of a company, issued as a form of non-cash compensation or as an incentive tool. ESOS gives an employee the right to buy shares at a fixed price for a defined number of years into the future. The trend toward broad-based share options may come to an end as companies are scaling back due to the changes in accounting standards. Similarly, companies in Malaysia, especially in the banking industry which originally offered share options to their employees are now pulling back this scheme. Does the movement to scale back share options affect employees’ motivation? This is an empirical question which this paper intends to explore. It is hope that the commercial banks will reconsider offering ESOS in rewarding their employees if the research finding indicates that it plays a significant role in motivating employees.