Pay for Performance?. A study suggests little correlation between executive compensation and company performance. [The Motley Fool]

I think the real issue is whether the CEO and higher ups have incentives to grow the company by making the options goals they have to strive for vs. free money.

For instance, if Company X's stock is trading at $10/share (and we assume that's close to fair value and has little or no outstanding debt) and you price the CEO's options at $10 with a conversion timeframe in 5 years...that CEO has little incentive to do anything of significance to the company other than play defense and not lose money.   Even sitting on his company's pile of cash in today's economy will earn that CEO and the company a nice 1-3% Return on Equity and result in his company's shares trading at a number above $10 in 5 years.  If, however, you make the conversion price $20/share due in 5 years that same CEO has to undertake a long term plan to compound the value of the company by 15% or greater over the next 5 years and hope that the market is valuing his company at a fair value just to turn a profit on his options.  It becomes a whole other ball game.

Which is why I don't like options as compensation and never have.  I would much rather see cash incentives given out.  If the CEO wants shares of his company he can buy them on the open market like everyone else.  I have a lot more faith in company's whose managers choose to buy in to the company than those who are handed shares to make them "owner-centric managers"

8:52:41 AM  #  

Downloads for peace: Beastie Boys' new protest-MP3. The Beastie Boys are offering free downloads of a new anti-war song they've just released, "In a World Gone Mad." via [Boing Boing Blog]

Even if I disagree with the political stance, I love me some Beastie Boys

8:41:27 AM  #  

A pictorial tour through asylum architecture and history.

via [Sciatica] (via ultimate insult)
8:40:25 AM  #  

I assume you guys have already seen Roogle.  If you haven't you should add your RSS feed and then check it out.  It has some promising potential.
8:37:32 AM  #