With the current wave of bankruptcies and missed earnings, directors may draw even more heat as investors focus on excessive option grants, high executive pay and cost overruns.
With $2.66 trillion under management at stock funds registered in the United States, fund managers could be a powerful force in protecting shareholders from pernicious managerial practices -- like excessive stock options grants and cozy boards.
In the worst cases, like Enron and WorldCom, the excessive use of options seemed to provide an incentive for executives to manipulate quarterly earnings, and then cash out their options at a favorable price, with little regard for the long-term welfare of the company.
In recent years, before the financial system imploded, we have had scandals involving the excessive granting of stock options, backdating options, misuse of executive perks, golden parachutes, over-generous pensions and so on.
If the duodenum is only involved, resection of the main pancreas is an excessive and unnecessary option because of significant portion of the normally functioning pancreas is removed, draining procedures and head resections are inapplicable because of narrow pancreatic duct and almost unchanged parenchyma.
The excessive use of stock options — at Dell and other companies — had other unfortunate effects.
When shareholders and regulators complained about the excessive use of stock options, Microsoft temporarily stopped issuing them in 2003.
"It is clear that excessive use of stock options can exacerbate a short-term focus and can encourage short-sighted behavior".
A shareholder vote might help avert them by, for instance, curbing the excessive award of stock options in the bull market (less than 10% of which, incidentally, went to the top executives).
"In 90% of the cases," says Munger, "the handing out of options is excessive".
