And yet, everybody assures everybody else that a world in which managements have awarded themselves over ten percent of the outstanding capital of America s publicly traded companies represents a desirable solution. Orwellian language has been supplemented by the Kafkaesque co-optation by business groups of professionals and ultimately the government in setting the rules under which business operates. Thanks to the Roundtable's lobbying skills and power henceforth, options not only are a one way street, but they are free they don t cost anything. You haven t gotten a single stock option since you became chief executive a rare event in corporate America. Accounting and tax rules all work against it.
Options are a free ride.
Typically, executives have argued that options are hard to value and therefore their costs should be ignored. At other times managers have said that assigning a cost to options would injure small start up businesses. And if expenses shouldn t go into the calculation of earnings, where in the world should they go . It behooves managers to remember that Abe s right even if an auditor is willing to certify the tail is a leg. Because the CEO community was so successful in overpowering FASB, the supposedly independent accounting rule setting organization, the challenge of creating a CEO compensation system with real alignment to owners interests has been exacerbated.