The Wall Street Journal recently noticed that executive stock options often seem to be dated and priced just before a leap in stock price. The number-crunchers decided that the odds against this happening on a random basis, for the companies studied, ranged from 800,000 to one to 100 mn to one.
It then became clear that at some companies, the options were provably backdated at specific – and, for the executives, highly propitious – dates.
How can we explain this, or the fact that all these incidents seemed to happen at around the same time? As Sherlock Holmes said, ‘When you have eliminated all which is impossible, then whatever remains, however improbable, must be the truth.’
So let’s sing a response to the Lovin’ Spoonful and their question, Do You Believe in Magic? Dead right we do. You often hear people talk about the magic of high finance, but it must be real!
It is clear that America’s senior executives discovered both time travel and telepathy simultaneously. They traveled back in time to issue themselves options, and mentally communicated the technology to their colleagues in other companies so they too could travel back and do the same thing.
Of course, this may seem a little far-fetched – but the alternative hypotheses are absolutely untenable.We would have to assume that much of the corporate leadership of the US was involved in an unprincipled conspiracy to defraud the shareholders, employees and pensioners of their companies – and what’s more, to make an end run around the SEC while they were doing it. Unthinkable.
Similarly, when faced with reports of executives awarding themselves bonuses for declining earnings and stock prices, it would be unthinkable and preposterous to assume any veniality on their part. It is much more reasonable to assume that they are creating real shareholder value, but that our ever-inventive corporate leadership is siphoning it off into another dimension – beyond the reach of the IRS – where it will be available at the appropriate time for the use of trusting and patient shareholders.
Think about the massive thaumaturgic advances made by all those compensation committees and experts who can prove with charts and diagrams that every executive must be paid above average in case they desert. In the American corporate world, everybody is above average, and so is their pay. It may be useful to send an exploration party into the fifth dimension to find out what happened to the below-average, since they are clearly not to be found in this universe.
These are special people we are talking about: masters of quantum uncertainty who can argue before annual meetings and compensation committees that they are uniquely indispensable for the companies that they manage, but tell the jury afterwards that they had no clue what was going on in their own corporate back yard.
I know there’ll be some skeptics out there, but clearly a select group of insiders is in the know – doubtless all honor graduates of the Hogwarts School of Business. How else to explain why institutions with large voting blocs and big research departments saw nothing amiss and did not raise the matter at annual meetings, and why respected banking operations did not put sells on these stocks? The answer is clear – because they know about the magic of finance.
So why will they not share the news with the rest of the world? Because it would pose a moral hazard, that’s why. Imagine the consequences for US public morale, let alone morality, if people learned that you could get much greater pay for working less efficiently, or that these individuals can go back and retrospectively rewrite their contracts?
Whatever would happen to the American work ethic? As the carefully selected readers of Harry Potter’s guide to business success will know, these are secrets that must be kept hermetically sealed from the Muggles (or Mugs, as we affectionately call them), who have to work longer and harder for less pay and fewer benefits or smaller dividends each passing week.
