One of the most successful US fund managers in the past decade is arguing for an end to employee sto...
One of the most successful US fund managers in the past decade is arguing for an end to employee stock options in the wake of accounting scandals that have rocked investor faith in listed companies.
Bill Miller runs the Legg Mason Value Trust, the only mutual fund to beat the S&P 500 index over an 11-year period.
He says that companies should give shares directly to employees as a reward for good work, but cease issuing options which have been identified as a major reason for the mismanagement of bankrupt energy trading company Enron.
In that particular case, the options has acted as an incentive to get executives to boost the share price at any cost, which included engaging in accounting practices that eventually led to the company's demise.
Miller says the rules prohibiting mutual funds from issuing options should now be extended to all types of companies.
Others may not support the outright banning of options, but there is support from other managers, such as Berkshire Hathaway chairman Warren Buffet for expensing options.
Warns on profits
Hargreave Hale seeking legal advice
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First mentioned in Cridland Report