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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (59408)	5/15/1999 8:19:00 AM
From: accountclosed	Read Replies (1) \| Respond to of 132070

Shareholders Groan as CEO Options Become Entitlements ... ''Repricing options is totally reprehensible,'' said Nell Minow, a shareholder activist and principal of Lens Inc., a Washington investment firm. ''A company is effectively telling its holders to suffer while it just piles more and more money on the executive who was running the company while its stock fell.'' Critics groan that repricing is merely the latest of a series of abuses in pay for chief executives. Options, grants that let executives buy stock at a certain price over a set period of time, were supposed to tie CEO pay to company performance; if the stock went up, the options were worth a bundle. Now, companies are repricing options to give executives a shot at cashing in even though the stock has sunk. In short, options have become an entitlement rather than an incentive. ... 'Madness' ''Hopefully, it will make company boards rethink this practice,'' said Patrick McGurn, vice president of Institutional Shareholder Services, a Rockville, Maryland-based firm that advises shareholders on corporate governance issues. ''Something has got to stop this madness.'' If history is any guide, however, FASB will have rough going. Five years ago, a proposal by the group would have required companies to estimate the value of all stock options and treat that as an expense. American corporations complained to the U.S. Senate, which considered a law that would have blocked the plan. FASB backed off in 1995 and passed a rule that requires companies to make disclosures about stock-option valuation -- using either the Black-Scholes method or providing a chart illustrating the potential appreciation of the grants -- in the footnotes to their financial statements. ''FASB is in for a bloody fight,'' said Crystal. One thing for sure, opponents of juicy CEO pay are used to losing these battles. bloomberg.com