Jacques,
Continuing from my previous post, so, AG wants to have a "knee-jerk" reaction to Enron, so he can kill nearly an est trillion dollars in future investor gains, projecting out ten years? (Please refer to my previous post.) That's essentially like saying, he would like to kill high-tech over the next ten years. And goodness-knows how much in tax revenue will be lost too?
From an old post:
What does Enron's fraudulent behavior of hiding debt (that you listed in your post) have to do with employee stock options that Greenspan wants to attack?
I find it ironic that Greenspan's proposed cure for Enron-style fraud and the dotcom utopia is to penalize innocent employees.
AG said, "some of the unsustainable euphoria that surrounded dot-com investing at its peak may have been exacerbated... " and "substantial capital arguably was wasted on a number of enterprises whose prospects appeared more promising than they turned out to be."
--- And how is that the employees' fault?
If anyone is guilty for the dotcom utopia, it's the VCs and founders, not the employees. So, let's look at the components of the pie: Founders get shares, aside from evergreen provisions. VCs get shares. Only employees get the bulk in options. So, yeah, let's penalize the employees and their options, the folks who aren't even responsible for this problem in the first place. What kind of logic is that? (And for Enron, it was the officers fault. At large high-tech companies, officers get no more than 10%, while employees get 90%+).
Regarding Enron, rather than fixing the book-keeping rules around disclosures of debt through intermediary parties, he's proposing to penalize employees? Huh?
federalreserve.gov
AG: "Clearly, most high-tech executives believe otherwise. How else does one explain their vociferous negative reaction"
Very simply so: If Greenspan negatively impacts stock options, he negatively impacts motivation. Stock options = motivation. Motivation is an intangible, something that's difficult for Economists to measure, so they dismiss it because they can't measure it. Never mind it's the most important ingredient for business success, innovation, and enhancing this country's GDP.
AG: "employed..capital misused."
His focus on penalizing innocent employees, rather than penalizing fraudulent behavior, is bizarre.
Are Silicon Valley execs really going to roll over and die on this issue and let AG get away with creating a policy that'll have a negative long-term impact on this country's growth by hurting employees' motivation? Excessively taxing SOPs will negatively impact motivation, innovation, and growth. It should be mandatory for government economists to work a few years at a Silicon Valley company, where the ingredients (particularly the intangible variables) to innovation are well-understood.
Regards,
Amy J |
