Bruce Chizen, the chief executive of Adobe, and several of his top folks stopped by the Mercury News last week for a lunch with the publisher and some editors and reporters. He gave a good account of Adobe’s marketplace and financial situations, including the interesting news, reported here by Jon Fortt, that the company is turning Acrobat into several different products.
Chizen made the typical Silicon Valley CEO statement that treating stock options as expenses is a terrible idea. Why? Because it will force companies to create a new way of describing earnings — the number mandated by the financial standards bodies, and another number that reflects something more realistic.
Odd. Tech companies never seemed to mind doing precisely the same thing when they were misleading investors in other ways that pumped up “earnings” in outrageous ways.
Of course, then he said it was no big deal in any event. Why? Because investors would figure out what was actually going on.
What will happen to employee options, he was asked? Well, there will be fewer, and the bulk will go to the folks at the top of the corporate ladder. Why? Because they’re the ones who really make a difference in the direction of a company.
More weird logic. The problem with options has never been the grants to rank-and-file employees; in fact, companies that give the bulk of options to those folks tend to do better, and shareholders tend to do better, too. Many of the worse outrages have been, in general, from companies that gave huge options grants to those very people who can steer the company: the executives who then made short-term (and sometimes outright corrupt) moves designed to pump up the stock price.
This perverse thinking is why investors have absolutely no faith in corporate leaders.