I seldom agree with your logic. However, I do think you are on target with your post # 10762. Pay increases are made when a general across the board increase is given to everyone. Then a merit increase is given to an individual for outstanding performance. The same should apply to stock options. I do not think options should be passed out unless the company has performed and the shareholder is also awarded an increase of some type.
After reading lots of heated arguments on this board - often laced with misinformation - I can no longer keep silent. Stock options are listed in a company's proxy along with other forms of compensation (which is generally paid based on prior performance), but they are not truly compensation. Instead, options are incentives for future performance. Their express purpose is to align the recipient's interests WITH those of other shareholders. Options have no value when issued: they are awarded at the market price on the day of grant. They only gain value when the stock price goes up, so they encourage recipients to do their part in improving the company's performance. When that happens, all shareholders benefit.
Merit pay/bonuses/stock options are supposed to be issued by management for performance above and beyond the call of duty. This isn't the way it works in the real world. There is a lot of back scratching that goes on between those that are in the positions of granting these favors. In the Corporation, B of D's give to upper level mgt for a return of like favors. Upper mgt then passes out favors as they see fit, not necessarily with respect of outstanding performance.