July 15, 2006

What started with an enterprising journalistic coup on options backdating is now developing into the sort of hairball story business journalists seem to love, which grows as more stuff gets stuck to it. The latest version is options awarded just after 9/11, when corporate managers supposedly knew that stocks were going to go back up. As I discuss, the story says as much about how journalists construct scandals as it does about executive compensation practices. The next step, as I discuss here, may be director liability for awarding compensation that looks bad.