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Technology Stocks : America On-Line: will it survive ...?
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To: Zoltan! who wrote (2173)3/6/1997 8:58:00 AM
From: Joel Sternberg   of 13594
 
>I believe in truth, justice and the American Way. AOL LIES, IMO. Period. (I went anti-AOL and
anti-IOM when I read the MF's - just too dopey.)
Pessimist? Wrongo. I'm the Optimist Maximus.<

Mr. Idaho, I am with you 100% on your sentiments regarding the lies. Here is the problem as I see it. Execs love to take huge option grants as compensation these days. Why? Because they can pretend that they are poorly paid, that they are aligning their interests with those of the stockholders, and all that good stuff, all the while not harming earnings since they don't have to expense the true value of the options. Everybody thinks it is a great idea to have compensation tied so closely to "performance." But, there are two problems with this. 1) The management is only willing to do this because we have been in a raging bull market, where a pretension of the vision thing is rewarded where performance fails. We'll just see how much the execs embrace these options if we go into a bear market. 2) Even more critically, it gives execs more of an incentive to lie and distort the truth. The more successfully they lie, the more they can make from exercise of options and sale of the underlying stock. The best part of all, they have their fan club of "lovers of the vision thing" to defend them by suggesting that a multi-million dollar stock sale is just normal behavior for people accepting slave wages of a couple hundred thousand. Go figure.
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