Sunday, October 01, 2006

Honoring the dead

Halloween has arrived a bit early to this blog!

Various cultures have found different ways of honoring departed souls with the objective of helping them find peace and not come back to torment those left behind.

Add to these practices the granting of stock options to the dead. We thought we had seen all sorts of bad things that could be done with options. We have seen backdating, and we have seen backdating by executives in hurriedly setup meetings just weeks after 9/11 even as some of their own employees lay dead (according to a Wall Street Journal piece that was mostly ignored by other media outlets!).

Now we get informed that Cablevision made an options grant to a dead executive, and backdated it to a time when he was still depleting earth's oxygen supply, just so that his estate/family could benefit. That should help his soul rest in peace! The ancient Egyptians bundled items needed for daily activities when they buried their dead, assuming these items would be useful in the after-life. In this era when executives love money, their options and their shower curtains, I hope coffin makers find a way to make space for these items to accompany their former owners in their after-lives.

Don't these overpaid executives, the companies and the boards have any decency left!

Another recent case of paying unwarranted respect to the dead was when a few people heaped praise on Kenneth Lay, former Enron head. Lay was looking at a sentence of more than 10 years. But the truth is that white-collar criminals like him often get light sentences. For someone like Lay, nature's punishment was timely - just look at the number of people whose life savings have been destroyed by him. Did he deserve any better than what states like California do to victims of the three-strikes clause ?

Look at the light sentence, if you can call it that, awarded to a Walmart executive recently, for stealing around half-a-million. Citing health concerns, he was handed a 27 months house arrest instead of the expected 10-30 year imprisonment. I for one hope that he meets the same fate as Lay. Interestingly, if you don't look like an executive, you can get 67 years for robbing just $15K.

It is time to treat white-collar crimes seriously. They destroy lives, plain and simple. War on drugs ? What a waste of resources! We need a war on thugs-in-suits-and-ties. Whether by signing themselves sweet packages, after laying off hundreds, in a bankruptcy deal or just walking away with millions in exit packages or asking and getting companies to cover tax payments on gains in the form of gross ups, these people have insulted investors. Enough is enough - show them the door or better still, the noose!

Full disclosure: I oppose capital punishment. The apparent support for it here is just an indication of the anger/disgust/frustration at corporate crimes that go unpunished or very mildly punished. From talking to others, I can say that an overwhelming majority of individual investors feel the same way.


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