[lit-ideas] Wall Street Standing Tall on 9.11
- From: "Andreas Ramos" <andreas@xxxxxxxxxxx>
- To: "Lit-Ideas" <lit-ideas@xxxxxxxxxxxxx>
- Date: Sat, 15 Jul 2006 19:21:32 -0700
This article in today's WSJ reveals how the top executives
of *some* leading companies responded to 9/11 -- by rushing
to enrich themselves by issuing stock options as markets
fell. Since these were options, it's hard to see this
as anything other than a selfish and opportunistic taking
advantage of the nation's misfortune.
--
Executive Pay: The 9/11 Factor
As stocks sank after the attacks, scores of companies rushed to issue
options to top officials. Some reaped millions.
WSJ, July 15, 2006; Page A1
http://online.wsj.com/article/SB115292514221107632.html
On Sept. 21, 2001, rescuers dug through the smoldering
remains of the World Trade Center. Across town, families
buried two firefighters found a week earlier. At Fort Drum,
on the edge of New York's Adirondacks, soldiers readied for
deployment halfway across the world. Boards of directors of
scores of American companies were also busy that day. They
handed out millions of bargain-priced stock options to their
top executives.
The terrorist attack shut the U.S. stock market for
days. When it reopened Sept. 17, stocks skidded more than
14% over five days, in the worst full week for the Dow Jones
Industrial Average since Germany invaded France in May
1940. But for recipients of options, the lower their
company's stock price when options are awarded the better,
since the options grant a right to buy shares at that price
for years to come. The grants set recipients up for millions
of dollars in profit if the shares recovered.
A Wall Street Journal analysis shows how some companies
rushed, amid the post-9/11 stock-market decline, to give
executives especially valuable options. A review of Standard
& Poor's ExecuComp data for 1,800 leading companies
indicates that from Sept. 17, 2001, through the end of the
month, 511 top executives at 186 of these companies got
stock-option grants. The number who received grants was 2.6
times as many as in the same stretch of September in 2000,
and more than twice as many as in the like period in any
other year between 1999 and 2003.
Ninety-one companies that didn't regularly grant stock
options in September did so in the first two weeks of
trading after the terror attack. Their grants were
concentrated around Sept. 21, when the market reached its
post-attack low.
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