Last updated on May 13th, 2019 at 02:39 pm
Using stock options as executive compensation amounts to stealing from the American investor. It leads to manipulations, and it is counter to free American capitalism. It is pure greed! Simply speaking, these unethical activities transfer wealth from shareholders to corporate management and directors.
Publicly traded corporations, with their board of directors in collusion with chief executives granting scandalous compensation packages, will force more government rules to protect the regular stockholders.
The practice of illegally awarding stock options to executives at artificially low prices has become the focus of the biggest U.S. investigation on corporate wrongdoing since the mutual fund trading scandal that led to $4.3 billion in penalties. Investigations into stock option grants have been launched against at least 24 companies by the U.S. Justice Department, the U.S. Securities and Exchange Commission or the Internal Revenue Service.
Do one or two or three top executives alone really make a corporation successful? I don’t think so. What about engineers and skilled employees? Who thinks that the top man needs to make 1,000 times or more than a loyal corporate employee?
Historically and principally, stock options were granted to existing investors in proportion to their number of shares held. The average American investor uses after-tax earnings to purchase shares, trusting in a publicly traded company.
Instead of throwing stock options at hired upper hands, let them have a performance cash bonus, and if they are loyal to their corporate employers and care for the corporate employees, they should use their after-tax bonus and purchase shares in the company they are supposed to build.
That would put them in a non-discriminatory way on equal footing with the regular stockholders in publicly traded corporations. I don’t understand why all private shareholders have not revolted yet.
Compensation stock options should be outlawed. This would avoid all the scandals and expensive government surveillance.
Werner X. Wolpert is executive director of the Hartford Area Development Corp.