More Financial Aid for CEOs

| Thu Dec. 28, 2006 6:33 PM EST

A good number of recent corporate scandals have had to do with stock options for CEOs. Paying executives in company stocks gives them heady incentives to focus narrowly on profits and engage in insider trading. (I mean, come on, if you knew your company wouldn't make its expected quarterly earnings, wouldn't you sell some stock before the price dipped?) Stock options also give executives the chance to hide their earnings in the technical fine print of annual corporate reports. The most recent spate of corporate wrongdoing involved setting stock options at outdated lower prices, allowing CEOs to maximize their capital gains. (For Mother Jones' quick and dirty coverage of corporate pay abuses, click here.)

The SEC has had just about enough. Err, scratch that. The SEC wants to make it easier for companies to pay their top executives in stock options and harder for investors to determine just how much they're handing over. The commission announced the Friday before Christmas (in a move that was clearly not designed to skirt media attention) that it will allow companies to account for executives' earnings from stock options by spreading them out over the full vesting period. Just this summer, the SEC had demanded for the first time that companies include annual estimates of executives' stock-options earnings.

That was then, this is now, baby. But Rep. Barney Frank, who is expected to lead the House Financial Services Committee, has cried foul and promises to look into the matter. So perhaps there will be some brakes on the robber barrons' trains this session.

Get Mother Jones by Email - Free. Like what you're reading? Get the best of MoJo three times a week.