Wednesday, December 27, 2006

Apple & Steve Jobs & Report of Faked Option-Grant Dates

I guess you could think of this as an opinion/editorial. And while the link is to today's story about Apple, Apple is just one company, and many companies are involved.

When games are played with incentive stock options the stockholders get shafted.

Public Corporations 101

Many stories on this sort of thing lately. Each one is reflective of management with the directors' connivance, in essence plundering the stockholders' property (the profits). The Unknown Advisor holds to the old-school idea that the corporation's profits belong to the stockholders, not management. Ideally, they should be either retained and plowed back into the business in an intelligent way or paid out to the owners as cash dividends, not stuffed into management's pockets through options programs. These programs are passed at stockholders' meetings when stockholders don't care enough to vote, and when the corporate directors act in a way to primarily serve the interests of management, not the real owners of the corporate enterprise. All too often, the directors are management. Directors are supposed to hire managers, not be the sycophants of managers or even the managers themselves. These days there are supposed to be some "outside" directors, to help deter, among other things, an unhealthy relationship between the managers and the board whereby the interests of the shareholders get subordinated to those of insiders.

Backdating of options grants. Repricing of options. Packing corporate boards with management sycophants. Resistance to expensing options. Stock repurchase plans that merely serve to mitigate the dilutive effect of the options programs, not to really raise share prices. Do we have enough problems with this subject, or not? This can be an opportunity for shareholders to assert themselves.

I would support mandatory big typeface, bold letter disclosure in each annual report and proxy mailing of the percentage of the corporation's profits going to highly-compensated individuals and to all employees through actual and proposed incentive and employer stock options programs. In the [alleged] words of Senator Hillary Clinton , back from her First Lady days, [there would be] "hell to pay". I would also support voluntary corporate stewardship initiatives at mutual funds and institutional shareholders in general to vote "NO!" on any corporate resolution involving portfolio shares held which would divert more than ten percent of the corporate profits to fund these programs. Small-caps would presumably need an exception on this. What say you, readers?

Apple's stock falls on report of faked option-grant dates - MarketWatch

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