Stock Options & the New Rules of Corporate Accountability: Measuring, Managing and Rewarding Executive Performance.

• Author: Marshall, Jeffrey
• Position: Book Review

By Donald R Delves. McGraw-Hill, 202 pages. $39.95.

Donald Delves, head of his own compensation consulting firm, starts this book with the firm premise that executive compensation in this country is frequently out of control. "Runaway stock option programs for executives have become a corporate epidemic," he writes. "Born of the intent to make executives think and act like shareholders, option grants created something entirely different:: enormous incentives for executives to think and act like option-holders, with far shorter-term and riskier perspectives than is healthy for most companies."

The book reports on the current public agita over the way option programs have enriched many executives, especially CEOs, at marginally performing and even poorly performing companies. "In many cases, executives have regularly received 'megagrants,' meaning options that are worth at least eight times the value of their salary and bonus," he writes, adding that "there is no more pressing issue facing corporate America than how--and how much--top executives are paid."

He delves (pardon the pun) into the ongoing debate over expensing options, noting, "Executive compensation practices are about to change. New accounting rules are being drafted that will require companies to take an expense for the options they grant. When options are no longer 'free,' companies will have to take a hard look at what they have granted and what they have received in...