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February, 2006

Filling the Stock Option Void

John J. Palter

Davis Munck, P.C.

James R. Leverette

Randall James Monroe Inc.

The use of option-based executive compensation is problematic from both a legal and public relations viewpoint. Sarbanes-Oxley legislation has effectively nullified the most common means of incentive-based compensation. This article discusses the implications of the legislation as well as options that are available to retain and compensate C-level executives. Although legal and accounting issues are the chief topics, this article stresses the importance of understanding the social and political context. Companies do not operate in a vacuum and must strive to provide the transparency in their compensation choices that the public and the government now require.

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Filling the Stock Option Void

Palter and Leverette Compensation Benefits Review.2006; 38: 50-54