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"We use equity grants to align the interests of employees and shareholders; without such compensation, they wouldn't take the risks they do." Wait, what?
by 001sky 13y ago
"We use equity grants to align the interests of employees and shareholders; without such compensation, they wouldn't take the risks they do."
Wait, what?
- evincarofautumn 13y agoWell, granting stock gives some pretty serious incentive to increase the value of said stock, as an employee. Stock options aren’t quite as compelling.
- brazzy 13y agoThat "what" was, I believe, a response to the implication that they want to encourage risk-taking, something that is not generally seen as unconditionally desirable (especially in the light of recent developments).
- evincarofautumn 13y agoAh, that’s fair, I didn’t think to interpret it that way.
- bhickey 13y agoExecutive incentives are negatively correlated with company performance. There's a body of literature on this. For example: http://online.wsj.com/public/resources/documents/CEOperformance122509.pdf http://online.wsj.com/public/resources/documents/CEOperforma...
- evincarofautumn 13y agoHah, that’s actually the reason I edited to hedge with “as an employee”.
- ScottWhigham 13y agoSee argonaut's excellent post above. He does a good job of explaining the risks vs. compensation.