Synopsis
            
             Enthusiasts have long argued that share option schemes provide management with a powerful motivation tool. Stock ownership aligns employee and shareholder interests will strengthening employee levels of commitment. In an increasingly competitive business environment, options are a way to attract and motivate key employees such as managing director or Chief executive officer (COE). In critically evaluate the use of share option to align managers and shareholders interests, this essay firstly describe how share option scheme work for basic understanding. Secondly the process how share option aligns managers and shareholders interest is discussed in relation to agency theory which suggests that there always conflict of interests between managers and shareholders. Illustration of real example from certain company case such as Forest Laboratory and Oracle gives contrast of whether share option as remuneration packages for managers aligns managers-shareholders interests. Finally, possible related problems of share option as compensation package in relation to align managers-shareholders interests are evaluated. Suggestions on how share option should be treated to align managers-shareholders interests are discussed, and illustrated with several companies' cases and judgment from several related bodies. In conclusion, properly constructed share option schemes do appear to motivate and drive recipients to increase shareholder wealth. However, incentive programs alone cannot solve all management and performance related problems. Share options, for all their problems, can be useful incentives if adapted and applied with rigidity.
            
            
             Introduction
             Enthusiasts have long argued that share option schemes provide management with a powerful motivation tool. Stock ownership aligns employee and shareholder interests will strengthening employee levels of commitment. In an increasingly competitive business environment, options are a way...