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Stock options came into favor for the reason that many thought greedy executives and chief executive officers were paying themselves too much. The idea was to instead give them stock options that are tied to the companys performance, and in that way, align their financial interest to the shareholders interest. It wasnt long until that idea was twisted from using options to partially replace fat salaries to one of issuing options grants on top of fat salaries. In the ten years leading up to 2001, the average value of option grants to CEO of S&P 500 companies has increased ten fold.
THE STOCK OPTION BACKDATING SCANDAL:THE HEADS I WIN TAILS YOU LOSE STRATEGY Stock options came into favor for the reason that many thought greedy executives and chief executive officers were paying themselves too much. The idea was to instead give them stock options that are tied to the company?s performance, and in that way, align their financial interest to the shareholders? interest. It wasn?t long until that idea was twisted from using options to partially replace fat salaries to one of issuing options grants on top of fat salaries. In the ten years leading up to 2001, the average value of option grants to CEO? of S&P 500 companies has increased ten fold. |
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