Rick, I must admit that stock options are being abused in ugly ways today. Backdating practices are ugly, even when they're legal, and repricing options to make up for inconvenient market movements is, as you say, wrong on so many levels. Rewarding mediocre or lousy performance is a bad idea, whether it's done in stock or in cash. But even you can see something wholesome in the practice, right? It's not the granting of options we need to get rid of -- it's the misuses of those grants.
I already outlined some of the things that are being done about those problems, though. Stricter accounting rules took effect earlier this year, and now we see the fallout from backdating scandals that probably wouldn't have been unearthed without the new rules in place. With another round of tightened practices coming, I expect an accompanying round of entirely new scandals as well.
The harsh light of clarity and transparency can help eradicate nasty corporate practices. Already, board after board is approving less lenient option grant policies, or dropping them altogether. Examples include Red Hat
Rick, I'll go out on a limb and say that you're a special case when it comes to motivation. Your name is almost synonymous to Fooldom for many, thanks to your long and hard service for the cause. It's obvious that you love your job, and every company should be lucky enough to have employees with your level of dedication. But toiling away at a less-than-inspiring desk job can be easier when you know that you get to share in the company's success.
Likewise, not everyone is Bill Gates; as co-founder of Microsoft
Stock-based incentives can be a powerful motivational tool -- if done right. All signs suggest that we're getting there sooner rather than later.
Fool contributor Anders Bylund owns no stock in the companies discussed this week, and he prefers Ubuntu to Red Hat. He aspires to a Foolish track record to rival his esteemed opponent one day. Foolish disclosure delivers on all of its promises, every time.