Share options in Malta

Abstract

This dissertation focuses on an agency theory perspective, which emphasises on the agent as an individual who is involved in share option plan management. The study through interviews with senior executives indicated whether share option plans are used to align managements' incentives, to attract and retain key individuals, for opportunistic reasons or simply as a participatory plan for a larger number of lower grade employees. The results of the research explain the objectives for share options and their implications in companies in Malta. Ranked in importance they are: 1. To align managements and shareholders interests 2. Motivation 3. To sharpen the relation between effort and reward 4. To tie key employees to the firm 5. To enhance the firm's position in the labour market 6. To provide tax efficient remuneration to employees; and as a cost effective way of rewarding employees