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Old 12-04-2012, 02:37 PM   #137
HonestChieffan HonestChieffan is online now
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Quote:
Originally Posted by chiefzilla1501 View Post
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.



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.


Options in the USA chart are valued at issue price. Thus it does not reflect true value as the share price can drop and the option has no value or a negative value.

There is no cost to the company for issuing an option until it is exercised. Thus there is no opportunity cost.

You are absolutely wrong on the impact on the decision making by issuing options. In the case I referenced, three years had to pass before the option was exercise able. That creates agape between short and longer term decisions. And they can go ten years so if the company does have a downturn, it may be 10 years before they have value.

I think your position would have merit if you had a specific that you could reference. Just railing against the man is not getting it done.
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