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http://dx.doi.org/10.9708/jksci.2011.16.2.267

The study on payment system improvement in Korean firms : The impacts of stock options on pay equity, job attitude and intention to turnover  

Cha, Sung-Ho (Korea Productivity Center)
Yang, Dong-Hoon (Sogang University)
Publication Information
Journal of the Korea Society of Computer and Information / v.16, no.2, 2011 , pp. 267-278 More about this Journal
Abstract
This study examines the relationship among stock options, pay equity, organizational commitment. Employees who received stock options tend to perceive their pay more equitable and the tendency shows a positive relationship among the amount of stock options and the equity perception. Also employees who received stock options perceive greater procedural equity, as they recognize stock options are awarded to many employees. However, the perception of stock options was not significantly associated with organizational commitment, turnover intention, and pay satisfaction. In 2003, the study surveyed 115 employees who received stock options in 10 publicly owned Korean firms that introduced stock option plans. The statistical analysis leads to the conclusions as follows. First, as the number of stock options increases, the receiver tends to perceive that pay system is more distributively equitable. Second, as the number of stock option receivers increases, the employees perceive the pay system more procedurally equitable. Third, stock option payments don't ensure that it improves pay satisfaction, turnover intention, and organizational commitment. This study shows a positive relationship that stock options work favorably in terms of pay equity, but the effect doesn't seem to be widely positive. The reason is that the introduction of stock options in domestic firms has been made only recently after the foreign exchange crisis in the late 1990s. More experiments and design issues should be discussed for the future.
Keywords
equity perception; job attitude; turnover intention; stock options;
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