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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Mike Buckley who wrote (43460)	6/13/2001 5:45:04 PM
From: hueyone	Read Replies (1) \| Respond to of 54805

There is a good series articles in this month's Fortune regarding the out of control granting of employee stock options to the detriment of other shareholders: The Great CEO Pay Heist fortune.com. Excerpt: The largest pay component in virtually all these cases is the stock option, which has mushroomed from modest use in the 1950s to a source of breathtaking CEO wealth today. A big reason for its runaway popularity is the insane way accounting authorities let companies treat options in financial statements--a way that's great for executives and awful for shareholders. And this article too: The Amazing Stock Option Sleight of Hand fortune.com Excerpt: Unfortunately, when it comes to the question of what all this largesse is costing you the shareholder, the lack of candor is frightening. While a mine of information about options is buried in proxy statements and the footnotes of annual reports, the impact of options is almost entirely invisible in the quarterly financial numbers most investors follow (earnings per share, cash flow, Ebitda). It's not just that companies are clever about hiding the true cost of employee stock options, or that nutty accounting rules help them do it. All of us--investors, Wall Street analysts, journalists--help them do it. By ignoring the numbers that are out there, albeit squirreled away in footnotes, we've become a nation of options-abuse enablers. Another article: This Stuff is Wrong----Interviews with members of executive compensation committees who speak anonymously about how hopelessly screwed up compensation packages have become: fortune.com Excerpt: The scandal of what goes on in compensation is how much is paid in the many, many instances when it isn't at all deserved. But a sub-scandal is the lack of a charge against earnings when stock options are issued. Companies go along as if these things are free, when actually they cost the shareholder enormous amounts. If you think how much more money CEOs have gotten because there isn't an earnings charge for options, it blows your mind. By the way, I believe you can still buy Warren Buffet's management of BRK for a simple $100,000 per year with no stock options. Best, Huey