A lot of recent headlines belong in your file cabinet in a folder entitled "Obscene Greed." Examples include big oil profits, Enron crooks and $200 tickets to see Celine Dion. But none of these really capture capitalism-run-amok quite like the recent trend of companies backdating stock options for their top executives.
It's far from a dull story about accounting irregularities.
The Securities and Exchange Commission announced that a number of corporations are under investigation for granting stock options in a way that maximizes the gain for executives. Instead of granting the options and letting the marketplace dictate how they'll do, these companies allegedly jury-rigged the dates that the options were supposedly granted so the recipients could have even bigger pots at the end of their rainbows.
Companies currently under investigation include Microsoft, Home Depot and a host of others, according to a report in the Wall Street Journal. (A list of the companies under investigation appears below.)
U.S. executives already earn hundreds of times the wages of their lowest-level workers --a much bigger disparity than exists in any other nation. Throw in corporate jets and lavish expense accounts and it's clear corporate executives are living rock star lifestyles. But it's a much bigger issue when executives start manipulating their stock option dates.
A quick tutorial: Stock options give an individual the right to buy stock at a specific price for a defined period of time. Assuming the executive does a good job, the stock price goes up and everyone wins. But the concepts of "marketplace" and "company success" are apparently too capricious for today's executives.
The companies under investigation are accused of going back in time to find dates when a stock's price was at its highest and then claiming that the options were exercised then, giving the executives the largest possible return.
This is a hard blog for me to write because I'm a big fan of options -- when used properly, they are a great way to reward success. But due to the back-dating controversy, options have taken on a whole new meaning, where failure isn't an option. Corporations have successfully created something I didn't think was possible: a financial escalator that only goes up.
Ironically, many of these same executives support the minimum wage of $5.15 an hour, a wage that puts full-time workers' families below the poverty line. And that leads me to something I never thought I'd propose -- a maximum wage.
If we imposed a maximum amount of money these executives could earn, we'd have more than enough money to pay for people currently working full time who don't have health care or who are using food stamps to make ends meet.
I can hear what you're thinking -- I'm a communist or socialist. I'd disagree. I have over 164,000 options from my work during the dot-com days, and I've learned the hard way that they make great wallpaper. Nor is it sour grapes -- I'm all for people being rewarded for a job well done.
No one would begrudge your success, Mr. or Ms. Corporate Executive, as long as you don't rig the game so that it only goes up. But if you don't act soon, I won't be the only one suggesting the need for a maximum wage.
Companies under investigation for backdating stock options (according to the Wall Street Journal):
Affiliated Computer Services, Altera, American Tower, Analog Devices, Apollo Group, Applied Micro Circuits, Asyst Technologies, Broadcom, Brooks Automation, Caremark RX, CNet Networks, Comverse Technology, Cyberonics, Engineered Support Systems, Equinix, F5 Networks, HealthSouth, Home Depot, Intuit, Jabil Circuit, Juniper Networks, KLA-Tenacor, Linear Technology, L-3 Communications Holdings, Macrovision, Maxim Integrated Products, McAfee Inc., Meade Instruments, Medarex, Mercury Interactive, Michaels Stores, Microsoft, Monster Worldwide, M-Systems Flash Disk Pioneers, Nyfix, Openwave Systems, Power Integrations, Quest Software, Rambus, Renal Care, RSA Security, SafeNet, Sanmina-SCI, Semtech, Sepracor, Stold-Nielsen, Sycamore Networks, Trident Microsystems, United Health, and Vitesse Semiconductor.
"Nine gamblers could not feed a single rooster." -- Yugoslav proverb
From "Re-imagine" by Tom Peters (DK, 2003):
"Fact is, despite sectoral turmoil and disappointments of the last two or three years, we are merely in the baby stages of the infotech revolution. Established organizations do not exactly shine in discontinuous times. Neither do successful 40-year-old middle managers. On the contrary, orgs and hierarchs tend to hunker down, to guard their turf ferociously -- and to pray that 'This, too, shall pass.' Well, it won't."
Here are the results from a recent Working Wounded Blog/ABCNews.com online ballot:
How valuable is a college education at work?
It actually makes things worse, 9 percent
Very, 23 percent
Barely, 29 percent
Somewhat, 38 percent
Bob Rosner is a best-selling author, an internationally syndicated columnist, popular speaker, and a recent addition to the community of bloggers. He welcomes your comments at firstname.lastname@example.org.
This work is the opinion of the columnist and in no way reflects the opinion of ABC News.