The Hog Wallow

When did the great executive stock option hog wallow really start? You can go back to the deregulatory push under Carter in the late 1970s, then move into the Reagan '80s, when corporate purchases of shares really took off with the leveraged buyouts and mergermania, assisted by tax laws that favored capital gains over stockholder dividends and allowed corporations to write off interest payments entirely.

Between 1983 and 1990, 72.5 percent of net US equity purchases were bought by nonfinancial corporations. At the end of this spree the debt-laden corporations withdrew to their tents for three years of necessary restraint and repose, until in 1994 they roared into action once more, plunging themselves into debt to finance their share purchases. This was the start of the options game.

Between 1994 and 1998 nonfinancial companies began to load themselves up with yet more debt. The annual value of the repurchases quadrupled, testimony to the most hectic sustained orgy of self-aggrandizement by an executive class in the history of capitalism.

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