Stock Option Backdating

[Finster]

We have CEO's making at least 850 times the average workers pay and stuff
like stocks options backdatings......rigged boards.....Michael Eisner,,Dic Grasso

...

Who was the HMO boss that paid himself 2 billions recently?

Bloomberg reported recently that United Health CEO William McGuire has received some two billion dollars in executive compensation, much of it through backdated stock options. That billion with a b, folks.

Is it any wonder the public is getting wary of stock investing? Where are the boards who are supposed to represent shareholders? Nothing but management cronies? A heist of historic proportions has been going on. It’s about time to revisit the whole question of stock option incentives.

The real CEO pay problem

Turning up the heat on stock options

CEO pay needs reality check

[Jim Nickerson]

Re: Stock Option Backdating

Is it any wonder the public is getting wary of stock investing? Where are the boards who are supposed to represent shareholders? Nothing but management cronies? A heist of historic proportions has been going on. It’s about time to revisit the whole question of stock option incentives.

What is going on in our capitalistic society is the same as comments on the weather, everyone complains, but nobody does anything about it.

I used to attempt to deal with a lot of people in which the underlying reason for their seeing me was some sort of stress to which their muscles succumbed resulting in various degrees of pain. What these individuals most wanted was for me to do something that would allow them to continue in their current circumstances but without pain. I had no such answer, but rather my answer was that someway, somehow, someday they needed to remove themselves from the stress that was resulting in their pain. In effect the problems was theirs and they needed to accept the responsibililty of removing themselves from the stress(es). Not always possible, but if possible likely the solution.

It is approaching about 2 years since I last owned a stock in an individual company, and for a large part my getting out of individual stocks was due to incessant voting I was asked to participate in, most of which was for the benefit of someone other than me as a small stockholder. All the reports and financial statements and guidelines on the boards' recommendations of how I should vote was a waste of my time, and a waste of the company's postage, printing, and paper.

The only reason I have ever invested was to try to make money by buying low and selling higher. I have never cared personally if the company treated its employees well, made good products, or if the executives were honest or outright thieves. Further I did not care if my putting my capital into companies was good for America. However, paying some attention to the financial news for just the past 20 years made me increasingly sickened about how the small investor is no doubt the lowest man on the totem pole when it came to believing those who run too many companies are actually looking out for my interests in any company in which I owned shares.

My answer to this, which is only a piecemeal answer, was to stop buying shares of any real company. It removed me from the serious aggravation of seeing what boards think are in the best interest of the company, and thus by presumed extension, my interest as a share holder. Similar answers I employ to shelter myself from the stresses of this society is to have stopped listening to the 10 PM TV news reports (where I live, it actually is a daily crime report interlaced with things to do to try to keep looking fit, young, or chic interrupted frequently with ads meant to entice someone to buy more stuff, borrow more money, or get your physician to prescribe the "right drug" to control your arthritis, sleep disorder, cholesterol, or erectile dysfunction, etc.) Further, and this is just in last six months, I have sworn off having any interest in American politics. To concern myself with its idiocy and hypocrisy was pure stress to my nervous system.

So for investing, which I do mainly to see if I can make a buck, I have tried to limit my vehicles to things that are fairly far removed from the operation of any one company. Index funds of the mutual and ETF sorts are all I now use. I am not looking to find another Walmart or Microsoft in its infancy, but just to make a buck in a system rife with more mischief than I am even close to understanding, and a system in which some will always come up with new ways to scam the little guy.

Good luck Finster with a life expectancy of 35-40 more years.

[Alfredo Dominguez]

Re: Stock Option Backdating

I used to attempt to deal with a lot of people in which the underlying reason for their seeing me was some sort of stress to which their muscles succumbed resulting in various degrees of pain. What these individuals most wanted was for me to do something that would allow them to continue in their current circumstances but without pain. I had no such answer, but rather my answer was that someway, somehow, someday they needed to remove themselves from the stress that was resulting in their pain. In effect the problems was theirs and they needed to accept the responsibililty of removing themselves from the stress(es). Not always possible, but if possible likely the solution.

I used to date a girl who went through several of the HappyZac pharmaceuticals in an attempt to rid herself of an emotional pain. It seemed to me the real problem was that she grew up the daughter of a Baptist church organist and still remained in that household, which must surely rank right up there with being the son of a preacher. The cure for her malaise was undoubtedly to get the hell away from her soul-killing fundamentalist environs and make a break for purer air. I would frequently say things to her like, "Of course you're miserable! You lead an existence that produces misery!" (I'm here reminded of a Samuel Butler novel, The Way of All Flesh) But no, the amount of this brain chemical rises and that one diminishes and let there be no questioning about what is cause and what is effect.

In a former life, I was a professional live audio engineer. One of the more surreal experiences that came of this was a concert wherein the volume was stupid loud and I noticed, from my location on stage, that those in the audience had gotten wise to the idiocy and were all wearing earplugs - just as the musicians and technical staff (including me) were already doing. If I had asked someone whether not it would be better to simply give the gain fader a downward push, I surely would have been ridiculed. My own jargon for my ear plugs was "ear condoms," the meaning being that they served to mitigate the adverse effects of behavior which one would probably be better off not engaging in in the first place. There seems a large market for such products.

My answer to this, which is only a piecemeal answer, was to stop buying shares of any real company. It removed me from the serious aggravation of seeing what boards think are in the best interest of the company, and thus by presumed extension, my interest as a share holder. Similar answers I employ to shelter myself from the stresses of this society is to have stopped listening to the 10 PM TV news reports (where I live, it actually is a daily crime report interlaced with things to do to try to keep looking fit, young, or chic interrupted frequently with ads meant to entice someone to buy more stuff, borrow more money, or get your physician to prescribe the "right drug" to control your arthritis, sleep disorder, cholesterol, or erectile dysfunction, etc.) Further, and this is just in last six months, I have sworn off having any interest in American politics. To concern myself with its idiocy and hypocrisy was pure stress to my nervous system.

Ah, a kindred spirit. But what does it mean for me when, at twenty-six, the only people I enjoy talking to are of my father's and grandfather's generation?

[Jim Nickerson]

Re: Stock Option Backdating

But what does it mean for me when, at twenty-six, the only people I enjoy talking to are of my father's and grandfather's generation?

My father, long deceased, when he encountered a baby and had a moment to socialize would say to the parent(s) "I wish I were that baby and you had another just like it." It took me a long time to figure out what he meant. What he was wishing for was the likelihood of the longer life expectancy of the child's versus his own ever-shortening one. Were it possible for such exchange or renewal of life expectancy to take place, I certainly would not want to go back today and start a new life as a baby with all that I see the world holds in its future and the rigors of trying to survive in it much less trying to achieve anything one might label as "success," nor would I want to be in your shoes at 26. And that is sad.

From what little I can piece together about you from your from posts, you seem way ahead of where I was even close to being financially (regarding knowledge) at 26. I assume that if talking to your elders is meaningful, then talking to your peers must basically be empty with regard to conversations containing wisdom--wisdom is generally is not high on the list of achievements in that age range.

I do not know what you should do with perhaps 55-60 years life expectancy (I certainly do not envy your challenge), but for myself with much less life expectancy, if I ever get close to having just 2M in liquid assets, hopefully not so hyperinflated it will only buy a loaf a bread, then I am going to move as far away from most everything resembling dense population as I can, probably even if my wife won't come. To do that would force me to become much more self-sufficient with regard to having something to eat and drink, which are two necessities that under some nightmarish circumstances could become items over which struggling individuals might resort to violence in order to obtain. Such self-sufficiency would, I hope, obviate the negative effects of worthless currency if ours ultimately achieves that nadir. Whether or not I will ever get my 2M, or remain healthy enough to in fact become self-sufficient, or mostly so, certainly remains to be seen.

You seem already to have achieved the wisdom of knowing less is more when it comes to physical possessions, and as such that should aid your mobility of getting out of Dodge, wherever that is, if push comes to shove; hopefully that old pickup will get you to a different and safer place. You bike is fine, but not a conveyance as far as I know that will allow you to carry your PM hoard.

Good luck, and I mean it.

[Finster]

Re: Stock Option Backdating

What is going on in our capitalistic society is the same as comments on the weather, everyone complains, but nobody does anything about it...

Good luck Finster with a life expectancy of 35-40 more years.

It does seem daunting sometimes. But sometimes, people do, in their own small way, something about it. They might, for example, refuse to pay up for stocks.

This might seem a bit paranoid, but I am convinced one of the reasons we have inflation is that Wall Street likes it. If interest rates were too high in relation to inflation, ordinary saving would be worthwhile. Corporations would have to provide good justification to shareholders for entrusting their capital to them. Managements would have to be good stewards of capital and have a discerning shareholder base looking over their shoulders. But with interest rates low compared to inflation, savers at the margin have little choice but to own stocks.

Now this all works fine and dandy for a while, but in the end, the return from stocks is always ultimately limited by the return corporations make on invested capital and the game must end. It did in the 1970's and the public eventually found that there were alternatives to cash, bonds, and stocks. And the public refused to get involved with equties again until inflation fell and interest rates dividend yields rose.

Now the same lesson has to be relearned.

[lobodelmar]

Re: Stock Option Backdating

Interesting discussion guys...

Jim, I don't know what we are supposed to do other than try to come out ahead in some way...the game is on, and you either play it or not. Yeah, it may be tough, especially when the rules suck and when so many people can find ways to ignore them to enrich themselves.

For us average joes out here, just trying to make a buck and scrape by, I am not sure what else you can do other than try to scrimp and save, manage your risk, pray that you remain healthy and employed, and hope your investments don't tank.

-- A 36 year old concerned about what life has in store...

[bart]

Re: Stock Option Backdating

This might seem a bit paranoid, but I am convinced one of the reasons we have inflation is that Wall Street likes it. If interest rates were too high in relation to inflation, ordinary saving would be worthwhile. Corporations would have to provide good justification to shareholders for entrusting their capital to them. Managements would have to be good stewards of capital and have a discerning shareholder base looking over their shoulders. But with interest rates low compared to inflation, savers at the margin have little choice but to own stocks.

Now this all works fine and dandy for a while, but in the end, the return from stocks is always ultimately limited by the return corporations make on invested capital and the game must end. It did in the 1970's and the public eventually found that there were alternatives to cash, bonds, and stocks. And the public refused to get involved with equties again until inflation fell and interest rates dividend yields rose.

Now the same lesson has to be relearned.

Count me in on being convinced about the reason for inflation, and do note the headgear on my avatar.

I seldom talk or post about the truly dark relationships and the few ("very best") people that create much of the mess, but rather just try and show various facts in some of my charts - at least its something I can do, as well as contributing to the few organizations that I think are truly doing something to reverse the trends.

[Jim Nickerson]

Re: Stock Option Backdating

Interesting discussion guys...

Jim, I don't know what we are supposed to do other than try to come out ahead in some way...the game is on, and you either play it or not. Yeah, it may be tough, especially when the rules suck and when so many people can find ways to ignore them to enrich themselves.

For us average joes out here, just trying to make a buck and scrape by, I am not sure what else you can do other than try to scrimp and save, manage your risk, pray that you remain healthy and employed, and hope your investments don't tank.

-- A 36 year old concerned about what life has in store...

I was 36 in 1977, and with regard to investments I did not have one of the concerns you mention--I was rock dumb. I think some way one has to "play the game." In that, rely upon yourself, boy! information is so much more available today than then, so avail oneself of it, and you cannot trust anyone else with your money except yourself--in my opionion. So it behooves you to get as smart as you can in order to best look after yourself and family financially.

I wish I could convey to you how smart I believe at least a some of the guys on these fora strike me as being--part of my being impressed is that I judge them based on how much I do not know--but beyond that they certainly seem to have a handle on recognizing what investing is all about, and most impressive to me they are not formally trained in economics, finance, banking, etc. What these guys show me is how smart someone can get to be if he/she works at it. So were I you, I hope I would be concerned enough to make myself as smart as is possible regarding money matters.

I do not know what the "average joe" wants out of life. I personally never spent a moment thinking about what stuff I wanted to accumulate in the way of possessions--but in retrospect I accumulated a whole lot of stuff I did not need, and it really did not make my life better--actually it made me more ashamed than anything else. "Scrimping and saving" almost sounds un-American at this moment, but to me it is a major orientation that a lot more people need to achieve. To have good health makes one fortunate, and at the moment I do not know that one can purchase it--so hope you have the good genes. Keeping a job is necessary, and hopefully you shall always be fortunate to be employed, and if one is not self-employed in an enterprise that is likely to succeed, one better have some savings.

Money to me more than anything means "control." The more money one has, the more control over one's life one has. If you've got $10 and the next guy only has $5 you are in a better position--not from the perspective of owning more stuff, but from the perspective of obtaining more of the necessities. "Money is made to be spent" is a sick notion to me.

Just by worrying about these financial issues now, may well place you ahead of the pack of those who do not. Stay with it, be frugal, and be smart. Good luck, lobodelmar.

[jk]

Re: Stock Option Backdating

this seems to be a thread for philosophizing and self-examination, and i'm in.

i share all the concerns mentioned here about what the future holds, and i worry about what the future holds for my children's [i've 3]. i have to watch out for my congenital bearishness and pessimism, however. my parents grew up in the depression and, although we led a middle-class, suburban life, i heard stories about that time and they stuck. apparently they stuck better with me than with my father, who managed to lose a significant amount of money in the 2000-2002 market drop. i was far more concerned about a repeat of 1929 than he was!

i find these discussions, and these issues fascinating, and my intellectual interest is of course complemented by the recognition that my own financial future is on the line.

i worry, however, about becoming too caught up in this finance stuff. i hear of too many older men who retire and become addicted to watching bubblevision and following stock quotes. i'm not as stupid as that, but i may be foolish enough to duplicate that pattern on a more rarefied level.

[Jim Nickerson]

Re: Stock Option Backdating

i find these discussions, and these issues fascinating, and my intellectual interest is of course complemented by the recognition that my own financial future is on the line.

i worry, however, about becoming too caught up in this finance stuff. i hear of too many older men who retire and become addicted to watching bubblevision and following stock quotes. i'm not as stupid as that, but i may be foolish enough to duplicate that pattern on a more rarefied level.

jk, no one I ever have ever known was immune to possibly being wrong and at times just plain wrong, but to me it is better to be well-educated in a topic at hand and be wrong than to be very ignorant and be wrong. In the former instance I believe the chance for learning from the misjudgement is enormous, and in the second instance nil.

[jk]

Re: Stock Option Backdating

jk, no one I ever have ever known was immune to possibly being wrong and at times just plain wrong, but to me it is better to be well-educated in a topic at hand and be wrong than to be very ignorant and be wrong. In the former instance I believe the chance for learning from the misjudgement is enormous, and in the second instance nil.

i understand the value of trying to make informed decisions. however, i sometimes wonder if i may be spending too much time on-line reading about this stuff. [i know my wife thinks that's the case.]

[bart]

Re: Stock Option Backdating

i understand the value of trying to make informed decisions. however, i sometimes wonder if i may be spending too much time on-line reading about this stuff. [i know my wife thinks that's the case.]

I sometimes wonder the same thing myself... so many aspects are still mysterious and I do love a good mystery.

Whenever I'm offline for more than a day or two and then come back, its still as fascinating and interesting as the day I retired and made investing into a career. And I do need to get out more too.

If there an AA outfit for charting addictions? ;)