Senate Democrats derailed a John McCain amendment to the “corporate responsibilty” bill being hammered out that would have applied the cost of stock options to a company’s expenses. Currently, companies can compensate people to any degree they like using stock options and not have them count against their balance sheet. Needless to say, high tech firms and other companies that hide labor expenses (and absurd executive salaries) by rolling them up into stock options vehemently oppose cleaning up the accounting rules to close this loophole in financial reporting.

I get the feeling that the reason this idiocy became kosher in the first place is the fad that said that executives should be solely devoted to maximizing shareholder value, and that the best way to insure that was to make them big shareholders in the companies they work for. As was inevitable, executives (with major prodding from shareholders) decided that the best way to maximize shareholder value was to focus solely on share price and not build for the long term. Furthermore, if executives stand to benefit greatly from rising share prices, they have a strong incentive (commonly referred to as greed) to do whatever they can to manipulate the share price so that it’s as high as possible. Hence the various financial scandals we’re seeing. Corporate executives are stewards of the companies they work for, and they should be working to build stable, strong companies that grow in value for the long term, not nicely polished turds that will spike in value right up until they’re flushed.