LETTERS.(ISSUES & INSIGHTS)(Letter to the Editor)

Pay For Performance

I was appalled by Kenneth Schroeder's piece on options (Viewpoint, Tuesday). The article was so full of unsupported statements and faulty logic that I found it difficult to believe that it was written by the CEO of a major corporation.

First, his assertion that the loss of stock options would bring innovation "to a screeching halt" is ridiculous. Thomas Edison and Albert Einstein didn't have any stock options, and neither did any of the millions of innovators before them.

Does Schroeder think all of the innovative people will suddenly turn off their brains and become supermarket checkout clerks or delivery truck drivers? No chance. They will continue to innovate, as such people have always done, and companies will find alternative ways to encourage and compensate them.

Second, Schroeder states that if a company were to expense options it might make an otherwise profitable company look unprofitable. Now, I don't pretend to understand the ins and outs of corporate finance, but maybe the company is, in fact, unprofitable. It would seem to my simplistic mind that if you are using options to compensate (pay) employees for their innovations, that is a cost of doing business. If expensing those options makes the company unprofitable, maybe the company paid more than the innovation was worth. Paying the employee with funny-money options does not change the underlying reality.

Third, his statement that most CEOs enthusiastically support corporate abuse reduction is nothing but motherhood and apple pie. Sure, if you put a bunch of CEOs in a room and asked them that question, they are all going to say yes. But their actions tell another story.

The national press has been full of accounting scandals and examples of greedy CEOs riding once-great companies ...