Product Description
Guidelines for curbing today’s stock option abuses, and making “payment for performance” the new imperative
Stock options account for up to 90 percent of the average CEO’s compensation–despite a falling stock market and often plunging corporate earnings. Stock Options and the New Rules of Corporate Accountability examines this hot-button issue, proposing new methodologies and techniques for better aligning stock options, executive compensation, performance rewards, and accounting, and making sense of what has become today’s most controversial form of compensation.
Executive compensation authority Don Delves explains how high-profile corporations like GE and Coca-Cola have opted to expense stock options and have adjusted their policies to prevent options from becoming disincentive tools, and he shows others how to follow suit. In addition, Delves gives decision makers the knowledge they need to:
* Increase accountability by treating stock options as expenses
* Balance options with other incentives
* Create healthier contracts between employers and employees
From the Back Cover
A Prescriptive Program for Examining the True Cost of Stock Options, and Restoring Health to Executive Compensation and Corporate Governance
Praise for Stock Options and the New Rules of Corporate Accountability:
“This frank and expert guide to options in the post-bubble, post-Enron, post-expensing future is filled with thoughtful analysis and practical guidance.”
–Nell Minow
Editor, The Corporate Library
“Stock Options and the New Rules of Corporate Accountability should be required reading for everyone involved in executive compensation, especially corporate directors. Not only does it provide a comprehensive analysis of how executive compensation ran awry, it offers a thorough, intelligent approach to arriving at a more balanced, fair, and effective executive compensation system.”
–Warren L Batts
Former CEO, Premark, and member of several corporate boards
“The Delves book is an excellent survey of the current executive compensation landscape. The interview style of the book makes it very readable.”
–Dennis Chookazian
Former CEO, CNA Insurance, and member of several corporate boards
“A very timely book. Delves is certainly correct. The existing accounting standards are biased and result in compensation plans unrelated to performance. Hopefully his efforts will help bring about needed change that will both improve financial reporting and encourage improved compensation plans.”
–James J. Leisenring
Member, International Accounting Standards Board
“Delves’ book clearly lays out today’s issues, assesses us all some blame, then specifically shows us how to build effective systems (including stock options) that are motivational and fair to the shareholder.”
–Bill White
Former CEO, Bell & Howell, and member of several boards
“Don Delves has given us a clear, lively exposition of multiple issues and variables to be considered. His interviews with thought leaders such as Paul Volcker and Myron Scholes, and the incisive questions he poses, help frame a robust debate on the proper use of options.”
–Ronald L. Turner
Chairman, President, and CEO, Ceridian Corporation
Executive compensation in America is out of control. Board members of some of America’s largest corporations have publicly acknowledged this problem and are actively searching for solutions. While new accounting rules requiring an expense for options are a step in the right direction, they are only the tip of the iceberg. The solutions will lie in more effective executive compensation systems, enhanced accountability, and increasingly rigorous corporate governance.
Stock Options and the New Rules of Corporate Accountability details the problems with the current system, and outlines common-sense measures that should be taken to dramatically improve the link between executive pay and performance. Drawing on his nearly 20 years of experience as a corporate compensation consultant, Donald Delves uses this noteworthy book to detail:
* The underlying causes of the recent explosion in executive compensation, fueled by overuse of stock options and overemphasis on stock price
* How options can act as an inefficient–and often damaging–misuse of valuable company resources
* Tools and questions that board members should employ in addressing corporate compensation issues
* A multifaceted strategy for both solving the problem and satisfying all constituencies, from stockholders to corporations to employees
* Urgent matters beyond executive compensation that must also be addressed to restore public confidence in corporate America
Stock options as a component of executive compensation packages are not going away, nor should they. But when option plans provide enormous financial rewards for below-average performance, it’s clear that something must change. Stock Options and the New Rules of Corporate Accountability explores the entire issue, and explains what corporate leaders, board members, and other decision makers must do to bring greater accountability and transparency to the top levels of leadership in corporate America.
Donald Delves, CPA, is founder and president of The Delves Group, a consulting firm that helps companies improve employee effectiveness and performance by assessing and redesigning how they are organized, directed, and rewarded. With an MBA in finance from the University of Chicago, Delves has nearly 20 years of experience as an executive compensation consultant with several top firms including Sibson and Company and Towers Perrin. He has been featured in the Chicago Sun-Times, Strategic Finance, Director’s Monthly, Crain’s Chicago Business, and many other professional publications.
