The use of stock options for executive compensation has become a lightning rod for public anger, and it's easy to see why. Many top executives grew hugely rich on the back of the gains they made on their options--profits they've been able to keep even as the value they were supposed to create disappeared. The supposed scam works like this: Current accounting regulations let companies ignore the cost of option grants on their income statements, so they can award valuable option packages without affecting reported earnings. Not charging the cost of the grants supposedly leads to overstated earnings, which purportedly translate into unrealistically high share prices, permitting top executives to realize big gains when they exercise their options. If an accounting anomaly is the problem, then the solution seems obvious: Write off executive share options against the current year's revenues. The trouble is, Sahlman writes, expensing option grants won't give us a more accurate view of earnings, won't add any information not already included in the financial statements, and won't even lead to equal treatment of different forms of executive pay. Far worse, expensing evades the real issue, which is whether compensation (options and otherwise) does what it's supposed to do--namely, help a company recruit, retain, and provide the right people with appropriate performance incentives. Only ethical management, sensible governance, adequate internal control systems, and comprehensive disclosure will save the investor from disaster.

【書誌情報】

ページ数：8ページ

サイズ：A4

商品番号：HBSP-R0212G

発行日：2002/12/1

登録日：2012/3/28