Stock options were supposed to be the great motivator, letting top management reap a share of the gains they produced for shareholders. They certainly enriched smart execs who cashed them in before the stock market tanked. But investors are getting poorer, not richer, as company after company shatters on the rocks of executive fraud, greed, and incompetence. Worse may be yet to come. Companies are still issuing options at a furious clip. In fact, 200 of the largest companies are handing them out in amounts approaching 3% of their outstanding shares every year, more than double the pace of a decade ago. The grant rate is headed yet higher as companies try to compensate executives for the lost value of options they received before stock prices fell. Moreover, with shares down sharply, the standard models used to price options show that companies will have to issue more of them to give executives the same dollar value each year.
展开▼
