Accounting in the new Market

For my sake, let’s begin with some basic questions:
What are stock options? A stock option is a warrant (certificates entitling the holder to acquire shares of stock at a certain price within a stated period) which gives selected employees the option to purchase common stock at a given price over an extended period of time. 1
Why do companies give employees stock options? Stock option plans are used to pay and motivate employees. They are very popular because they meet the objectives of an effective compensation program. 1
What is an effective compensation program? It is one that (1) MOTIVATES EMPLOYEES TO HIGH LEVELS OF PERFORMANCE, (2) HELPS RETAIN EXECUTIVES AND ALLOW FOR RECRUITMENT OF NEW TALENT, (3) BASES COMPENSATION ON EMPLOYEE AND COMPANY PERFORMANCE, (4) MAXIMIZES THE EMPLOYEE’S AFTER-TAX BENEFIT AND MINIMIZES THE EMPLOYEE’S AFTER-TAX COST, AND (5) USES PERFORMANCE CRITERIA OVER WHICH THE EMPLOYEE HAS CONTROL. 1
How do stock options specifically meet the object...