I certainly don't think it will 'fix' the market or 'kill' the technology industry.
The first question to ask is, do we think that accounting for stock options will substantially reduce their use? If the answer is no, I don't know why we'd want to bother with reform (I can think of lots of silly psychological reasons, but no good ones).
So let's assume that it would substantially reduce their use. The fact is that stock options are right now widespread in the tech industry. It is the only way for tech companies to compensate their employees highly without interfering with their ability to stay in business (i.e. without reducing their short-term cash flow).
Some (not all) high-tech employees are intelligent, passionate and hardworking, and those sorts of employees generally demand high compensation. It's not like a law firm where you can just stick it to clients in order to pay your employees--high-tech firms often need stock options if they are going to pay their employees the going rate. Money is definitely not the only reason I came to work at Microsoft, but if the choice hadn't been (good salary + great stock options) vs. (great salary) but instead was (good salary) vs. (great salary), it would have been harder to justify working in high-tech instead of some higher-paying field.
Secondly, I do think that stock options encourage employees to think of the long term. At Microsoft, which is granted a unique and unusually successful case, employees generally think and speak in terms of what's good for the company, rather than what's good for me or good for my particular foxhole. I think that stock options have a lot to do with that.
So no, I wouldn't say that stock option reform will kill the high-tech industry. However, I do think that stock options are a particularly good form of compensation for the high-tech industry. Stock options can be abused, as can any form of compensation. Greedy execs will always find a way to rob from their shareholders.
Ethan |
