Marie Leone, CFO.com | US
September 6, 2006

Unethical behavior blamed on tax rule?

How sad that we are blaming a 1993 tax rule for unethical behavior in backdating stock options as well as the exorbitant rise in stock options as a method of compensation. This rule, which limited the tax deductibility of cash compensation to $1 million, was not a limitation on what companies could pay their executives but simply disallowed the tax deductibility of compensation in excess of $1 million. We have seen that Corporate America (and the individuals who run it) will choose time and time again to ignore ethical and moral lines (and sometimes legal lines) to make more money for the people at the top. We have created an environment of greed which encourages putting the pursuit of money ahead of everything else. Perception is reality and as this message has been communicated more and more it creates a mindset even at the small business level that devalues employees, relationships, and the team spirit in order to make more money. I find it interesting that they are looking at repealing the 1993 law instead of taking away the deduction for options granted at fair market value. Although if they did I'm sure Corporate America, along with its accountants and lawyers, would find another "creative" (read unethical, immoral, and possibly illegal) way to get money into the hands of executives.

Posted by Curtis Aubrey | Sep 11, 2006 9:00 AM ET