The stock-options-backdating hydra reared a number of its ugly heads Wednesday.

CNET (NASDAQ:CNET) chairman, CEO, and co-founder Shelly Bonnie resigned because of this problem. McAfee (NYSE:MFE) chairman and CEO George Samenuk retired, citing "improprieties" at the security software company. These follow other dismissals at Apple (NASDAQ:AAPL), Mercury Interactive, and Comverse Technology (NASDAQ:CMVT), to name a few.

Here's a great list from The Wall Street Journal of other companies involved in this debacle.

Today, I want to focus on home-furnishings retailer Bed Bath & Beyond (NASDAQ:BBBY), which issued its report on Wednesday after reviewing its stock options grants and procedures.

Here are some highlights.

  • It identified various deficiencies in the process. No surprise; otherwise, there wouldn't have been a review.

  • The company isn't planning to issue a restatement of past earnings, although it will reclassify $66 million of equity on its balance sheet. It's "reclassifying" that $66 million to $0. Hmmmm.

  • Some hindsight was used in selecting some annual grant dates. That's pretty nebulous.

  • The CEO had the authority to select the grant dates without conditions or documentation. The CEO and co-chairmen had the authority to select the dates for their own options. Translation: The kids found the cookie jar and could dip into it.

  • These leaders believed they were acting in the best interest of the company by using these compensation tools to attract and retain talent. Translation: Here's our "get out of jail free" card.

  • This one is my favorite: The committee recommends that all options be priced at no less than 100% of the stock's fair market value when the decision was made to grant the options. Translation: We're taking the cookie jar and putting it on top of the refrigerator.

Here's what I don't understand: The committee said there was "no willful misconduct." OK, I think that says, from a legal standpoint, that no one did anything wrong. But is that entirely true?

There were lax rules in place and no oversight for the process. Leaders realized this and backdated some options to guarantee an immediate profit to certain employees, perhaps even to themselves. To me, that's willful, because they realized and exploited the loophole.

As far as misconduct, that one's a bit tougher. Giving someone options that are already in the money is like paying them a bonus they haven't earned yet. Executives wouldn't dish out free cash, so why would they backdate options to make them in the money and dish those out? That creates a perverse incentive, and it sure seems like misconduct to me. Maybe not in the legal sense, but it's giving compensation away for free. That's not necessarily in the interests of shareholders, who bear more risk than the employees who receive backdated options.

I used to be agnostic on options as compensation, but I'm really wondering now whether they shouldn't be abolished in favor of cash payments for performance. That way, you can't get a free ride before you actually do the work, you don't get a free ride from the market's whims during good times, you suffer no penalty during bad times, and the compensation expense can be accounted for directly. If employees want to own stock in the company, let them use their bonuses to buy shares on the open market, taking on the same risks as all the other shareholders.

I think corporate America is just greedy, and this whole backdating issue exposes another layer of that problem. I don't care what fixes are made to the process at Bed Bath & Beyond. Its leaders still dished out free cookies when they weren't really supposed to. Shame on you.

For more on the options backdating foolishness (small f), check out:

Bed Bath & Beyond is recommended in both Stock Advisor and Inside Value . CNET is a Rule Breakers recommendation. McAfee was a former Stock Advisor pick. Take a look at other picks -- and their performance against the market -- with a free trial to any of our newsletters.

Retail editor and Inside Value team member David Meier does not own shares in any of the companies mentioned. You can view his TMF profile here. The Fool takes its disclosure policy very seriously.