Warren Buffett: Discussion on Stock Options. Would he like RSUs and performance shares?
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Warren Buffett: Discussion on Stock Options: http://bit.ly/nnd7GP . New article/blog on his 1985 letter to shareholders worth reading again. Stock grants and who gets them (senior executives, managers, and/or employees) have changed since then for many reasons, some of which he highlights and other reasons, including accounting rule changes.
What do you think his thought would be on the move to restricted stock, RSUs, and performance shares? My bet is he would at least like the move to performance shares (for more on these grants see: http://bit.ly/mV5Wd1).
Bruce Brumberg, Editor
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Bruce, great find!
Buffet;s desires for better stock option design in 1985 were limited by the adverse accounting comparisons between fixed price and any other type of option (performance, indexed price etc...)
With the advent of FAS 123R (20 years later) we thought many of these old arguments would fall away and there would a golden age in creative plan design. This of course, didn;t really happen.
With the advent of Say on Pay this year, we are finally seeing real movement to less time-based options and more performance-based equity. Of course, people generally still avoid variable priced options and performance-based options like the plague (far to unpredictable for most), but they have started to roll out performance units in real way.
Thanks for the links to your articles as well.