Wednesday, March 28, 2012

Interesting piece on stock option payments for management, by Kyle McLean of Exploration Insights:  The conflicting issues of dilution and alignment of interests, combined with a capital intensive situation (like mining exploration and new technology plays) mean that management mistakes are paid for by shareholders in businesses where very few of the companies could ever receive a cash payment on sale of their real estate or intellectual properties that exceeded their market cap.  He argues for an incentive system based on and fostering accountability, a focus on capital gains, entrepreneurial spirit, and a caretaking mentality.  Not sure how this would be be into practice, though.

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