tag:blogger.com,1999:blog-5465015914589377788.post5244567358741815464..comments2024-03-20T09:32:16.592-04:00Comments on Michael James on Money: Alignment of Interests with Stock OptionsMichael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-5465015914589377788.post-56851770288757767162008-07-06T11:49:00.000-04:002008-07-06T11:49:00.000-04:00Jim: I agree that the stock acquired through stoc...Jim: I agree that the stock acquired through stock options should be accounted for properly either by the method you describe or as a charge to earnings. Even when accounted for properly, though, stock options just don't create the right incentives.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-39847366264764772222008-07-06T11:16:00.000-04:002008-07-06T11:16:00.000-04:00Stock options are just an all-round bad idea imo t...Stock options are just an all-round bad idea imo to the long term future of a company. Creating stock is dilutive to existing shareholders, just like printing more money. This should not be done lightly in the first place. Creating stock should be used to raise much needed capital, not to reward employees. A first good start would be to restrict stock options to only be exercisable against the existing stock base of the company. The company should first have to acquire the stock through bidding on an exchange, before selling it to an employee.Jim Somervillehttps://www.blogger.com/profile/08438509407388777099noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-22749060777893974622008-07-04T15:51:00.000-04:002008-07-04T15:51:00.000-04:00Gene: I've read many of Buffett's writings, and i...Gene: I've read many of Buffett's writings, and it's likely that he has influenced my thoughts on stock options. I also got to see the effect of stock options on a company first hand. The results were good for some of the employees, but the company's long-term fortunes suffered terribly.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-39588117259943458842008-07-04T15:23:00.000-04:002008-07-04T15:23:00.000-04:00Great post. I agree with your assertion that empl...Great post. I agree with your assertion that employee compensation should be tied to each employee's influence. The janitor should not be paid based on the company's stock price.<BR/><BR/>I would have thought your post was written by Warren Buffett. He has talked about this in the past.<BR/><BR/>Stock options can also affect dividend policy and stock buybacks. Option-laden executives would rather buy back stock, share price be damned, than pay a dividend. A stock buy-back increases price, while a dividend tends to lower it.genehttps://www.blogger.com/profile/05608927986297939720noreply@blogger.com