Friday, September 22, 2006
Annals of Incentive Pay
In this case, an obvious incentive to rise from the dead:
In a regulatory filing made Thursday, Cablevision disclosed that it had granted options to an executive after his death, but improperly recorded the date of the grant to an earlier time when the executive was still alive.
Cablevision didn't identify the executive but The Wall Street Journal, citing people familiar with the situation, said the options were given to Vice Chairman Marc Lustgarten, who died in 1999. The Journal said Lustgarten's estate was entitled to exercise the options upon his death.
I challenge the laissez-faire business blawgosphere: defend this compensation practice!
As an adult professionally following the cable television industry, I watched from afar as Lustgarten was instrumental in Cablevision's successful expansion into programming and sports. His death in 1999 at age 52 of pancreatic cancer came soon after he helped establish The Lustgarten Foundation for Pancreatic Cancer Research, which is now the largest private funder of pancreatic cancer research.
Of course, backdating options is wrong, and the Dolan family that controls Cablevision (and others in many other industries) did it primarily to enrich themselves. At least in this case, when they did so, they didn't exclude the widow and children of a key executive who had already died. They could have, and we would never have known. Now it's one of those illustrative ironies we love to read and chuckle over.
I'd hope that Cablevision's largesse wasn't determining whether Lustgarten's wife and kids would have their basic needs (or extended basic needs, if you will) taken care of. Otherwise, all widows and orphans should have it so good.
(Also, small world note, my father grew up in Bayonne, where my grandfather ran an eponymous Esso station on Broadway until he died in the early Seventies.)