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- Title
Restricted Stock versus Stock Options: The Case of Jones Apparel Group, Inc.
- Authors
Carlson, R. Loring; Vogel, Thomas J.
- Abstract
In recent years, the structure of executive/employee compensation packages has focused less on stock options and more on restricted stocks. The Financial Accounting Standards Board (FASB) characterizes both of these alternatives as stock-based compensation. The reasons for the shift are numerous and include increased scrutiny of executive pay after recent corporate scandals and a renewed emphasis on the expensing of stock options using the fair value method. In this case, we focus on the issues that led Jones Apparel Group, Inc. to change its focus from stock options to restricted stock in the compensation package of its Chief Executive Officer. Jones was not subject to any scandal or corporate malfeasance, but the case demonstrates how recent events have impacted companies that use stock-based compensation. The case allows students to compare and contrast the corporate governance and accounting impacts of stock options and restricted stock.
- Subjects
RESTRICTED stock options; STOCK options; JONES Apparel Group Inc.; EXECUTIVE compensation; FEDERAL Accounting Standards Board; SCANDALS; CHIEF executive officers; CORPORATE governance; FAIR value
- Publication
Issues in Accounting Education, 2006, Vol 21, Issue 4, p449
- ISSN
0739-3172
- Publication type
Article
- DOI
10.2308/iace.2006.21.4.449