Originally Posted by HonestChieffan
Depends on the option but the options I received were of zero value until they were exercised. We were awarded so many shares at market price the day of option declaration. We could not exercise for 3 years and had to exercise in 10. To exercise we had to pay the option price.
Options are not a gift of stock. I recall only one option I received that was never exercised. I know a couple were dynamite with splits taking place. And a couple were not so much.
I know how options work. Our focus on stock options as compensation has encouraged gambling and short-term orientation. It basically says you get to keep money you make, but you're protected if things go south.
Another incentive was paid in the form of a Incentive award. That was stock that was given to the managers who earned them. No cost to the awardee. However, you paid regular income tax in the year of the award on the full value.
Another compensation was a Long Term Incentive. I don't even recall how that was supposed to work but I recall it didn't pay squat.
Do you have any actual examples of the things you rail against or is it just a global broad sweeping diatribe?
I am merely talking about your claim that determining executive compensation is a simple calculation. How are you valuing your options? Through Black-Scholles? Are you factoring in the opportunity cost of what that increase in compensation could have been spent on instead? There are multiple ways to calculate executive compensation and even those ways don't always account for everything.
And no, it is not a sweeping diatribe. I am not talking about average compensation. I am talking about median. Median isn't talking about a few bad eggs skewing the results. Median means that the result is true for at least half of the list if not more.