Abstract
This report provides several theories about the dysfunction of stock options and the reasons why they do not work. Our study is focused on the 90's, especially in the USA, a country where stock options are the most generalized. This paper examines the evolution of stock options in three different western countries: USA, United Kingdom and France. Data and studies permit us to illustrate the theories about attraction, retention, motivation, and the hypothesis that perceived cost is lower than economic cost. Although stock options can have inciting effects for some reasons, we explain in this report that stock options do not really work or work only for chairmen or top 5 executives. Nowadays, there is a huge debate about how to provide incentives employees. There are many ways to recruit, keep and motivate employees. One way, is to give workers a contract which includes stock options. Since the early 70s, stock options have become one of the most important derivative instruments besides stock futures.
