Share options are a tender subject with company directors. Many who were millionaires on paper two years ago have seen those fortunes evaporate along with their sinking share prices. Options have value only when the company's share price rises above the exercise price - the fixed price that the executive agrees to pay when the option matures. If the market price drops below the exercise price, the options are said to be "under water", and are worthless.
One senior executive of a technology company - a man rich on paper at the height of the dotcom bubble - groaned to me recently: "My options are now so far under water that even Jacques fucking Cousteau couldn't find them."
Other directors are luckier. Their options are still potentially valuable. But even they face difficulties. They may not be allowed to exercise the option for months or years. Strict rules forbid directors from dealing at certain times of the year. And then there are the image problems: it doesn't look good to be seen to be baling out of your own company. Meanwhile, shares continue to plunge; many directors fear there is worse still to come. (One of the more revealing ad libs in the recent sermon to corporate America from Henry Paulson, head of Goldman Sachs, was his view that, "in their heart of hearts, many CEOs think that their companies are still overvalued". The same goes for British chief executives.)
Some of the City's sharper accountants have come up with a wheeze to get round the problem. It's unethical. It's sneaky. But it ain't illegal. Or at least not yet.
Some directors are using spread-betting firms secretly to lock in share-option profits. They simply take a "down bet" - in effect, they wager that their employer's share price will fall. If the price does fall, the resulting reduction in the value of their options is offset by their winnings from the bet. If the price rises, their losses with the bookies are offset by even larger profits from their options. Either way, they crystallise their options profits - and they don't have to tell a soul. Unlike conventional share deals, which directors are obliged to disclose, spread bets are not covered by stock market rules.
One of the biggest City bookies, confirming that he sees a growing number of these bets, says that some accountants advising directors on their personal finances are "very enthusiastic".
The practice is grubby. It makes a mockery of one of the tenets of modern-day capitalism - that the interests of management should be aligned with those of shareholders. It misleads shareholders, who are led to believe that the directors are at least in the same sinking ship as them; in fact, they have whizzed off into the sunset on a gold-plated rescue launch.
Financial PR consultants in theory act for client companies. In practice, they act for the senior managers of those companies. Usually the distinction is unimportant. Not always, though.
The other day, I was being spun at by a maestro of the dark arts. He tried to downplay my story that a certain company chairman and his finance director had misled shareholders. On behalf of the two directors, he bombarded me with phone calls, e-mailed me explanatory documents, and generally tried to persuade me that the episode was the merest trifle. He was unfailingly polite and friendly.
The story, however, was watertight and duly appeared in the London Evening Standard. But was it right that the PR agent's bill - and bill there will certainly be - should go to the company? In effect, the shareholders will have to foot the bill of a consultant who was trying to suppress the truth about how they were being misled.
Too often the PR industry spends its time defending or polishing up the image of the executives, not that of the company. Shareholders deserve to know more. As a start, why not compel listed companies to disclose in the annual report who their external PR advisers are and how much they pay them? If they can do it for auditors, they can do it for spin-doctors.
Stelios Haji-Ioannou, the chairman of easyJet, is trying to raise £277m in the City to buy the rival no-frills airline Go. Amid the pages of fine print in the capital-raising document is a section alerting prospective investors to "potential problems with the Boeing 737".
Stelios refers to two 737 crashes in the early 1990s, possibly caused by rudder malfunction, and writes that easyJet has since modified all its 737s to Boeing specifications. He adds: "Despite these modifications, there can be no assurance that a material rudder malfunction or related problem will not occur on one of easyJet's 737-300s or 737-700s."
Is it just me, or is there something a bit odd with our priorities? Airlines are compelled by City rules to warn shareholders that planes do sometimes fall out of the sky. But they're not obliged to tell the actual passengers.
