Let's say Dr. Evil is chosen as the new CEO of Microsoft, and receives in compensation ONE BILLION OPTIONS with a strike price of 23.69 (i.e. at the market) and

Let's say Dr. Evil is chosen as the new CEO of Microsoft, and receives in compensation ONE BILLION OPTIONS with a strike price of 23.69 (i.e. at the market) and an expiration in Jan '11. These options are trading on the market at about $4, so if Dr. Evil sits tight and continues on the company's current strategy we can assume his compensation will be $4 billion on average. If he uses the "roulette strategy", on the other hand, his expected return is 23.69 * 18/38 * 1e9 = $11.2 billion. That's much better, and not as much work. In a company with a lower implied volatility than Microsoft, the options would be worth less money initially and the roulette strategy would look even better by comparison. Now, the shareholder lawsuits could be a problem. So Dr. Evil will have to look for a way to disguise his strategy. Fortunately (for him), there are lots of reckless things a company can do that aren't quite as obvious as playing roulette.