A study on the effectiveness of the share option scheme in Singapore

Abstract

This research project aims to evaluate the effectiveness of the Share Option Scheme

(SOS) in the Singapore context. Three aspects of the scheme are examined. Firstly. our

study shows that the potential costs, whether in absolute terms or relative to the profit

before tax, could be significant for companies. Secondly, the SOS is found to be perceived

by companies as effective in reducing staff turnover, to be motivational to employees and

to improve organisational commitment. Thirdly, contrary to popular belief. when key

financial ratios are studied, the performance of companies with the SOS are found to be

less satisfactory as compared to the industry.