IBM will pay each of its board members $200,000 a year,and will no longer grant stock options. The directors can take their compensation in IBM shares.
Some board members will miss that days when they got cash comp plus options. If the stock took a big ride up, they could exercise and sell the shares. No money invested. No shares to hold. A quick profit.
The options back-dating scandal has stabbed the old board compensation methods in the back. Even if officers and directors are not all greedy pigs, many companies want to make certain that there cannot be any perception that directors can make a quick profit withour having any skin in the game.
IBM’s is a good solution. Let’s hope no one figures out how the game the new system.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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