Employee Stock Options Case Study

A. Summary of Chapter 1
This chapter explains about Employee Stock options, its requirements by organization and Companies that use stock options in their compensation plans usually do so for one or more of the following reasons: to align incentives, to hire and retain, to postpone the timing of expenses, to adjust compensation to employee risk tolerance levels, for tax reasons, and for cash flow advantages. In actual in sense Employee Stock options are a form of compensation that is provided to employees and are stocks offered to employees in place of their salaries
Further the chapter focuses on importance of valuation of this stock option from both employee and companies respective. There can be cases where employees tend to value this option

Therefore, employee stock option cannot be considered as a good motivation factor because the returns are not same and therefore the compensation provided to the employees will vary most of the time thus affecting the motivational levels which ultimately will have impact on the performance of company at

Summary of Chapter 2
This chapter focused on financial strategy of Roche Holding organizations to use its available financials into strategy of organization to transform its treasury into a profit centre. The company could have faced many risks completely different from its operating activities of manufacturing, marketing, and distribution. There were two assumptions take by Roche to implement its strategy. First being the profit return from treasury activities is better than other strategic options and second assumption being that organization can create profit from both assets and liabilities.
For many non-financial companies, the tactical step that Roche took is anathema to the general canons of conservative finance, because the major sources of competitive advantage (especially for pharmaceutical companies) are thought to be derived from other factors, such as new products, research and development, novel applications, extensions of old product lines, quickness to the market with new products (e.g., finding ways to streamline the drug application and approval process), pruning unprofitable products, strengthening marketing and distribution, and undertaking joint marketing and/or research ventures. Given this image of the key success factors, it is easy to understand how conventional wisdom would argue the treasury's role should be to stabilize cash flows to support long-term research and development. The conventional view was that the treasury should make sure funds were