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Before the boom economy of the 1990s, employers attracted and kept employees with one major form of compensation: salary and bonuses. Stock options were merely a blip on the radar screen. Today, however, stock options are the dominant form of compensation and the dominant form of wealth of top executives in the United States. The March-April issue of the Harvard Business Review noted that Jack Welch, CEO of General Electric, had unexercised stock options worth more than $260 million. Intel CEO Craig Barrett's unexercised stock options were worth more than $100 million, and Disney CEO Michael Eisner exercised stock options on Disney stock in 1998, netting more than one-half billion dollars.
But exactly what are stock options and how do they work? This question must be answered before we move on to the main subject of this Manual: how to value and divide stock options in divorce cases.
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