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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 241.56+0.3%Jan 7 3:59 PM EST
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To: H James Morris who wrote (129270)7/29/2001 11:23:56 AM
From: Glenn D. Rudolph  Read Replies (1) of 164684
 
Another excerpt from another excellent article in the New York Times:

"Here's another truism to throw onto the slag heap: Stock options are a boon to shareholders because they motivate management and align the interests of investors with those of executives.

The greatest damage to this theory has been done by companies that reduce the strike prices of their stock options after their shares have plummeted. Option repricings, as they are called, are quite simply a gift to management and workers that outside shareholders do not receive.

Companies that reprice their options have typically argued that doing so is necessary to keep treasured executives from leaving for sweeter packages elsewhere. Implicit in this argument is the belief that an exodus of executives would hurt the company.

But a new academic study, to be presented at the annual meeting of the Academy of Management starting on Aug. 5 in Washington, indicates that companies that reprice options actually show higher levels of executive turnover later. More important, the study found no evidence that the repricing of options was associated with improvement in the financial performance of the company.

The authors of the study were three academics at Indiana University's "

nytimes.com
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