Killed This but Forgot to Stuff Garlic in its Mouth
by Clifford Asness, Ph. D. AQR Capital Management, Inc.
In this editorial, in the Wall Street Journal no less, two accomplished executives who should know far better argue not to expense stock options for employees making less than $100,000 a year. Why not also ignore the wage expense of these same employees? I will explain. It's obvious idiocy. Ok, maybe I'll explain a bit more. An expense is an expense. If you want to help "inequality," go for it, but do it honestly and directly not by warping the accounting system and bending rules you still (incredibly) object to and would obviously discard in total if allowed (it's obvious they still object to expensing stock options as they are not advocating my joke about wage expenses - they get those are really expenses, but not so for stock options).
Unbelievably, the editorial even refers to "access" to stock options in justifying this mislabeling of expenses. Can we reserve those weasel words for places that aren't the Wall Street Journal?
If you want an oldie on this topic here's mine. I stand by every word including the dripping and deserved sarcasm.
Fighting old battles already supposedly won is exhausting and distressing. When the old and terrible arguments are inappropriately camouflaged in the new language of "inequality" and "access" it's doubly so. When it's in your favorite editorial section, quadruply (I'm a quant so exhaustion is obviously exponential).
Employee stock options are, always have been, and always should be, accounted for by all honest people as an expense. Pretend social justice warriors should focus elsewhere.
This post was originally published at AQR Capital
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