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The idea behind stock option grants was to tie CEO's pay to the company's performance.Good idea, but It is not quite working out because CEOs are primarily inte
by jazzyk 11y ago
The idea behind stock option grants was to tie CEO's pay to the company's performance.Good idea, but It is not quite working out because CEOs are primarily interested in pumping up the stock price short-term, rather than in long-term health of the company.
The vesting period should be spread over 5 years or so. I would also grade company's performance relative to its peers/competitors/industry, not on just the stock price growth, which may be caused by other factors (like the Fed inflating markets through ZIRP).
- pcurve 11y agoAgreed. I would just like to see it go away for everyone, period. With options, it always feels like paper money, so those granting it do so in huge amount without proper consideration for its true costs to shareholders. It's not just CEOs making obscene amount of money. Many ordinary executives are routinely granted high six, 7 figure worth of options on the backs of their employees and shareholders. 1/3rd of the top 1% are company executives.