Executive stock options should be discouraged

[Dan Moore]

I think there should be a policy to discourage exectutive stock options, which Sydney Finkelstein says are partially responsible for the mess we're in:

http://www.businessweek.com/managing/content/apr2009/ca20090417_941667.htm?chan=careers_managing+index+ page_top+stories

[Will Durant]

You realize that stock options came into vogue when Congress passed legislation essentially capping executive salaries?

Eliminating stock options will just create the next problem.

[JohnLocke]

I think there should be a policy to discourage exectutive stock options, which Sydney Finkelstein says are partially responsible for the mess we're in:

http://www.businessweek.com/managing/content/apr2009/ca20090417_941667.htm?chan=careers_managing+index+ page_top+stories

Who's going to limit them? The government?

[Dan Moore]

You realize that stock options came into vogue when Congress passed legislation essentially capping executive salaries?

Eliminating stock options will just create the next problem.

No, I didn't realize that there's legislation 'essentially capping executive salaries.'

I am no expert on how stock options are taxed, but I think the tax treatment should be made less favorable, with no loopholes.

[Will Durant]

No, I didn't realize that there's legislation 'essentially capping executive salaries.'

revenue reconciliation act of 1993

http://www.allbusiness.com/glossaries/revenue-reconciliation-act-1993/4960753-1.html

deductions for executive salaries exceeding $1 million were limited.

[Kenshiro]

No, I didn't realize that there's legislation 'essentially capping executive salaries.'

I am no expert on how stock options are taxed, but I think the tax treatment should be made less favorable, with no loopholes.

Section 162(m) limits deductible pay to $1 million for certain execs unless it's performance based.

I agree with you that stock options are a very poor form of compensation. The accounting rules used to allow stock options granted at the money to be issued with no expense, but luckily that changed a few years back with FAS 123(R).

I would much prefer incentive performance based compensation be in the form of restricted stock, possibly with vesting or grants based on market return compared to peer companies.

[Kenshiro]

Who's going to limit them? The government?

It would be prudent to do so at the banks they've taken over.