The article however also provides that the labor market is very competitive in terms of skills and they are demanding higher remuneration. As a result it becomes insufficient to be able to support the high skilled labor and employees of a company at their current compensation. The compensation in the long term will have to be increased by the companies in order to retain the employees.

However the higher salaries also have the risk of lowering the earning per share through higher expenses and lower profits, resulting in a consequent drop in the market share price as well. To depict this the article aptly states “But what will happen if stock prices sag and options no longer pay so well? ‘If we go into a bear market, companies may have to rethink this,’ says Peter T. Chingos, head of the executive compensation practice at compensation consultant William M. Mercer Cos. Rethinking options programs may mean going back to offering even higher salaries, which do show up on corporate balance sheets. On the other hand, employee demands for higher compensation during a slow economy will also sag.” (Cohn, 1999)

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