loop what amazes me is the recent announcement by Texas Instruments that management stands by its decision to award options amounting to 14% of its stock last year. It doesn't take a rocket scientist to figure out that awarding that much makes it almost impossible for investors to make any money on a long term basis. Even if the company was able to grow revenue and net income by 14% each year, then the share price would not rise at all because of the option overhang. Most people do not understand that the long term impact for these options will be huge for the investors.
It is not the CPA's that will change it, it is wall street that must. In order for wall street to change, they will need to change their focus back to the individual investor and that it is returns from investments that will drive wall street's long term success. Right now too many businesses from wall street to silicon valley to the accounting profession have been allowing greed to dictate decisions. Hopefully we are on the verge of getting back to basics. All the funny accounting and BS that has gone on over the past decade is so bad for the long term investor and it needs to change otherwise the stock market has no chance of ever achieving its long term growth rates of the past. Especially when companies like Texas Instruments is handing out 14% of its investors wealth. Without the potential for investors to make money, the money flow into stocks will surely dry up.
That is what the management of these companies need to realize. They have been overcompensating themselves and their employees for so long but if not for investors willingness to put up money, there will be no company. Management's all over the United States, esecially in silicon valley, need to wake up to this fact. I hope Buffet continues his crusade because it is people like him that need to keep the issue at the forefront of people's minds so things will change.
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