Stock Options: Corporate Governance, Not the Mechanism, Is the Real Problem

Dave Kellogg argues that stock options themselves are a sound incentive mechanism, but corporate greed, poor governance, and the Internet bubble have corrupted their implementation. He critiques stock option expensing as ineffective at solving executive compensation problems while inadvertently eliminating rank-and-file options, and addresses the backdating scandals as symptoms of governance failures rather than fundamental flaws with options.