Monday, October 15, 2007

In today's counter-intuitive news

Stock Options for CEOs Harm Company Results

This may get the vote for today's very odd business article. It claims that "option heavy" CEOs under-perform CEOs with less options. 'Companies with "options-heavy" CEOs had an average annual shareholder return of 26 percent versus 36.5 percent for companies run by "options light" CEOs during the study period.'

One interesting point is that the study period was from 1993 to 2000, a time when the market was booming, and included 950 companies. The study did not focus on the tech sector, nor did it take a look at the impact of broad-based stock employee stock option plans implemented by many tech firms. It does however bring the immediate question to mind if broad-based employee stock option plans help or hinder the bottom line for shareholders.