Options, Innovation and Silicon Valley.

Bruce Nussbaum

I always thought that options were a terrific incentive for promoting innovation, startups, growth, wealth, mobility and all those good things that make our society better and richer. Actually, I still do. By and large, options were used effectively and efficiently in the 90s in the New Economy--they were spread around from top to bottom--and they helped create lots of new companies. By and large, options were not used effectively in the Old Economy--they were given disproportionately to a tiny number of top execs, and they didn't act as an incentive to innovation. In the end, option abuses, mostly in the Old Economy, led to a change in the accounting rules for options and pretty much killed them as a financial incentive to growth. This was one reform that hurt innovation.

Now we have a wild hunt for back-dated options from the booming 90s. Certainly there were abuses--and some in Silicon Valley. But we have top tech execs spending huge amounts of time and money dealing with the past rather than the challenges of the future. Yes, the egregrious bad folks should pay big penalties. But please, let's not be crippled by the past in moving forward.

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