Originally Posted by HonestChieffan
Thats true up to a point. As you state it it is 100% correct. But if that option represents a substantial part of your compensation and it drops to the negative side, then in essence what you hoped, or had valued it in your planning, then you just took a hell of a hit in income.
Its a matter of perspective at that point.
So then you would agree that an executive may be motivated to boost short term initiatives that drive up the stock price in order to exercise options instead of long term initiatives to boost long term value? You have three years vested which isn't bad (I've heard people say 4 is optimal) but in situations where you have less, that just encourages CEOs to inflate value, cash out, then claim that problems in the future are somebody else's problem.
Not to mention the way issuing options dilutes shareholder value by giving them significantly less ownership stake in a company.
I am a firm believer that executives will take what they're given. Again, this is less of an indictment on executives as it is the compensation structure that encourages bad behavior.