That you have to ask this question at all proves my point. We have a lot of people on this forum who don't understand much of business or economics.
What do stock options (not "stock offers") have to do with salaries, you ask?
Stock options are a common component of executive compensation, which typically consists of a direct payment component, a fringe benefit component, and a stock options component. Ideally, the stock options should vest only upon the successfully meeting one or more pre-established criteria such as a defined net income or market share, or the achievement of a specific task, such as successfully completing certain development milestones.
Occasionally, stock options are granted to board members as part of their compensation packages. This is a practice which has attracted some well-deserved criticism. Better, in my opinion to restrict board members to cash compensation.
I hope this answers your question, at least in part.
He was given a preferred option someone like you and me could never get for basically nothing. Unless you can show what value he added to the company other than his access to “the system” then I’ve proven MY point. It’s a payoff.
Frankly, I’m sick and tired of our so-called representatives using their influence, access and ways around the law (I wonder how above board the SEC would think the deal was) to enrich themselves. It’s like the fact, for some reason I don’t believe is lawful, Congress can exempt themselves from insider trading.
It all stinks. I don’t care if it looks above board. And it’s hypocritical since Gore and his ilk attack anyone else for the same so-called compensation.
I understand your explanation and did from the start. I agree with you that it should be scrutinized more closely. I bet the SEC would jump on a company that just willy-nilly put anyone “on the board” and give them large compensation packages.
Mitt Romney gets criticized for being on boards and I bet he actually gives something in return.
BTW, I have a degree in economics also (yeah, that pays the bills) and that “science” really hasn’t got much to do with compensation per say. A lot of the shift to those forms of compensation, ironically, increased when the Clinton tax bill of 1993 limited corporate salary write-offs to $1 million a year.
Again, it stinks. And I won’t take the condenscending tone personally! :)
That was a joke!