I learned about an interesting business practice for stock options called "back-dating." Evidently, some executives have been historically allowed to choose the vesting date for their options--pretty much allowing them to gain a handsome profit without doing anything for the company. The article also noted (sorry no link, it was hard copy) that Sarbanes-Oxley regulations had effectively ended the practice--at least overtly. Lots of companies have done it--Altera, United Health, and others. Top execs have literally reaped billions of dollars from this practice.
What's really interesting, though, is that it took government action to end this practice. I can't imagine going to a meeting of the board of directors of a company with a message "I'm paying my executives millions of dollars to simply choose the vesting date of their stock options." I would have hoped that anyone who did that would have been fired, or at least reminded that pay is supposed to be given for actual work.
No such luck. Evidently it takes government action to even push this sort of thing under the table, which suggests to me that the measures government uses to "help" businesses (tax law, tax breaks, regulations, corporate welfare, etc..) are shielding business leaders from the markets.
Know Your Lifts: The Romanian Deadlift (RDL)
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In the Know Your Lifts series, we’ve covered the high-bar back squat, the
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4 comments:
"Interesting" is one way to put it I guess. But this stuff is a scam.
If the maturing value of their stock options would result in a higher yield, they are allowed to "back-date" the options to a point where the yield would be higher.
Sarbanes-Oxley came out right after the Enron debacle w/ the hope of squelching much of the overt corruption present in big business today.
(Now, if only the gov't had their own version of it!)
Ironically, another magazine I've read points out that Sarbanes-Oxley is one of the regulations that advantages big business over small business--the costs of compliance are more onerous on small businesses. So even keeping big business in line benefits big business over small business. Sigh.
And yes, it'd be nice if the government were held to ordinary accounting standards....
Wait, you mean the US deficit and all those projection of spending were not correct? :o)
You betcha, brother Mercy. Actual debt is 55 trillion and counting the last time I checked.
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