TWO-CONTRACT ANALYSIS MAY IMPERIL STOCK OPTION PLANS

Authors

James F. Ward, Member, Illinois Bar

Abstract

Stock option plans generally have withstood judicial scrutiny where they have complied with the requirements developed to control the operation of this type of arrangement. It would seem, therefore, that the future of stock options is secure against even the most critical court review-that nothing in the nature of the stock option arrangement would render it vulnerable to a general attack. The writer believes that complacency in this assumption is not now advisable. Recently a view (from a respectable authority) has been introduced unnoticed into this area, and may have gained the acceptance accorded to an unsuspected imposter. This view, when analyzed for its logical implications, actually challenges the basic premise of the stock option arrangement. None of the recent considerable commentary on stock options seems to refer to this opinion which the writer believes to be a substantial error in fundamental analysis perpetrated in an important decision, and followed without consideration in other cases. This article will examine some of the implications of the erroneous analysis employed in Gottlieb v. Heyden Chemical Corporation.

Recommended Citation

James F. Ward, TWO-CONTRACT ANALYSIS MAY IMPERIL STOCK OPTION PLANS, 52 Mich. L. Rev. 849 (1954).
Available at: https://repository.law.umich.edu/mlr/vol52/iss6/4