Stock-Based Compensation

Most companies have resorted to stock-based compensation schemes for employees so as to save on the amount of money they could spend on paying the employees. The other claim that is common among many companies that practice stock-based compensation is that by compensating performance by use of stocks, the employees are made to be part of the company and that in the end they will put in more effort to deliver more palatable results. In 2013, Coca-Cola Company formulated a plan that focused on compensating its employees by using stocks. The plan was met with criticisms from professionals including David Winters who claimed that the plan would significantly dilute the shares of the company, posing a threat for the investors who had suffered opportunity cost to invest their money in the company in form of equity capital.