Word: options
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Dates: during 1960-1969
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Last fall a new monthly magazine called Parti Pris (Option Taken) appeared in Montreal, offering poetry and revolution; after five issues, it has a circulation of 3,500. "Quebec society has entered a revolutionary phase," declared Issue No. 1. "It is ready to take all means, not excluding violence...
...handsomest fringe benefit in U.S. business is the stock option, a corporate incentive that enables a good many executives to make fortunes beyond their salaries. Like a warrant or a "call," the option is a device that enables a man to buy stock at a fixed price long after the shares have risen above that price. Last week's tax bill removes some of the glamour from the stock option, but will not easily stop the growth of an incentive that is now used by two-thirds of the nation's public companies...
Under the new tax rules, an executive who gets an option will have to buy the shares allotted to him sooner and sell them later than in the past. He must now pick up his optioned shares within five years instead of ten and then hold the stock for three years instead of six months in order to have his profits taxed as capital gains at a rate no higher than 25%. Beyond that, he will have to pay 100% of the price that the stock sold for on the day that the option was granted (some companies have awarded...
Loud Uproar. In the battle over the tax bill, 39 Senators tried in vain to keep stock option profits from being treated as capital gains, pointed out that the U.S. Supreme Court ruled in 1956 that they should be regarded as salary supplements (the Court left it up to Congress to decide whether to tax them as such). Some stockholders have also complained that companies that set aside shares for option dilute their stockholders' equity. In the press and in Congress an uproar followed Chrysler's report in December that 16 of its high executives last year picked...
While the executive has much to gain from an option, the company has nothing to lose; it simply sets aside a parcel of its unissued shares-usually about 5% of the total stock-for its key men to pick up later. U.S. Steel limits its options to 300 top managers, and many other large companies give options only to vice presidents or chief executives. But General Electric spreads its 4,000,000 optioned shares among 1,555 employees, Westinghouse grants them to plant managers and research assistants, and Hewlett-Packard has even reserved some stock options for top salesmen...