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Foaming rant in support of Stock Options expensing
by Decius at 10:42 am EDT, Apr 7, 2004 |
] Excessive grants of stock options, whose cost is
] unreported to shareholders, encourage executives to
] pursue short-term profit maximization strategies that in
] several cases have led to criminal activity. If this is the arguement for options expensing I feel quite confident opposing the idea. There are some good points here, in terms of inapproppriate executive behavior, as well as the idea that financial policy shouldn't be made by politicians. On the other hand, by making options appear to cost more then they really do we're essentailly punishing the guilty execs by putting an embargo on the food shipped to their countries. The execs aren't going to pay. The people that work for them will. This essay doesn't acknowledge that fact. |
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RE: Foaming rant in support of Stock Options expensing
by flynn23 at 2:21 pm EDT, Apr 7, 2004 |
Decius wrote:
] ] Excessive grants of stock options, whose cost is
] ] unreported to shareholders, encourage executives to
] ] pursue short-term profit maximization strategies that in
] ] several cases have led to criminal activity.
]
] If this is the arguement for options expensing I feel quite
] confident opposing the idea. There are some good points here,
] in terms of inapproppriate executive behavior, as well as the
] idea that financial policy shouldn't be made by politicians.
] On the other hand, by making options appear to cost more then
] they really do we're essentailly punishing the guilty execs by
] putting an embargo on the food shipped to their countries. The
] execs aren't going to pay. The people that work for them will.
] This essay doesn't acknowledge that fact. Which is a good reason to oppose expensing stock options. But here's another reason why this article's logic is flawed: it's not the unreporting of the value of options granted to senior execs. It's the ability of those execs to vest those options too quickly. Most of the hoi poloi are on tiered vestment schedules, and/or have more severe lockup agreements if the company isn't already public. Put the fat cats on those same schedules and you generally dilute the 'let's do anything to pump the stock' mentality. Another aspect to this is that there are only a small number of people who could actually pump the stock in this time frame, namely the finance people and the CEO. It's folly to assume that some VP of Sales or CIO is up to no good in pumping up the stock on a quarter by quarter basis just to elevate their options. Although this was the case with Healthsouth, it was driven by their CEO. Pretty much the entire senior management team was in on the gig, including the HR department. This is an anomolie I feel though because it would be very difficult to recruit that many people in a ponzi scheme without it leaking. |
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RE: Foaming rant in support of Stock Options expensing
by bucy at 2:25 pm EDT, Apr 7, 2004 |
Decius wrote:
] ] Excessive grants of stock options, whose cost is
] ] unreported to shareholders, encourage executives to
] ] pursue short-term profit maximization strategies that in
] ] several cases have led to criminal activity.
]
] If this is the arguement for options expensing I feel quite
] confident opposing the idea. There are some good points here,
] in terms of inapproppriate executive behavior, as well as the
] idea that financial policy shouldn't be made by politicians.
] On the other hand, by making options appear to cost more then
] they really do we're essentailly punishing the guilty execs by
] putting an embargo on the food shipped to their countries. The
] execs aren't going to pay. The people that work for them will.
] This essay doesn't acknowledge that fact. You should call TIA today and argue with Dan about this.
18:30EDT |
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