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When warrants are given to key employees, how does that align the employees goals with the...

When warrants are given to key employees, how does that align the employees goals with the company?

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Answer #1

Giving warrants to key employees gives benefit at both ends i.e. to the employees as well as to the company thus it aligns the employees goal with the company. A company aims at stability of tenure and especially of those employees who are the key employees and have been fully trained by the company to work in the company's environment and on the other hand key employees thrive for more profit and job satisfaction along with a sense of accomplishment and distinction .

Giving warrants satisfy all these needs as by giving warrants an employee gets the benefit of acquiring the shares of the company at the nominal rate, and sell them (after a defined tenure set by his employer) and make a profit.

On the other hand a major benefit to both employer and shareholder of giving warrants is the positive impact that results when employees have an equity ownership in the company. This results in improved productivity, profitability and overall corporate performance.

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