Monday, October 16, 2006

2 Comments:

The problem goes deeper than Dr. McGuire. We now have over 100 companies under investigation for back dating stock options. We have a former, short term, FDA commissioner under investigation for conflict of interest. The WSJ recently highlighted a university president for his lavish spending on housing renovations, entertainment expenses, and his wife's marijuana smoking.

The most telling part of the university's presidents story was the support in the letters to the editor section. The consensus was that the increase in endowment funds covered the increased expenses, even if off the books, and the wife's drug usage was a minor embarrassment.

We have simply reached a point where government, academic, and professionals, cannot be trusted. Our best interest have simply become secondary too, what is often, a very minimal financial gain. We cannot expect our young students, and professionals, to uphold a higher standard, when those teaching them and in positions of authority, are themselves biased and corrupt.

Many years ago I was taught we cannot pass enough laws to cover every situation. There is a dependence on the moral compass of the individual to guide them in their every day dealings. We seem to have lost this moral guide and I fear it will only get worse over time.

Steve Lucas

By  Anonymous, at 7:36 AM  

That article is pure fearmongering. Options back-dating is perfectly legal, ethical, and above-board. The strike price of stock is an arbitrary number that the company just pulls out of thin air. If a company chose, they could perfectly well roll dice to come up with the strike price, or pick something fun like 14 head of Texas longhorns per share.

The sticky point is how the option grant is accounted for. The company's expense is the market value ON THE DAY OF GRANT minus the strike price, and the EXPENSE OCCURS ON THE DAY OF GRANT. Period.

By  dn, at 12:51 PM  

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