NYT Interview With Michael Jensen

Michael Jensen is one of the icons of modern finance. In addition to writing many of the most cited pieces in corporate finance he also was one of the founders of the Social Science Research Network. He was recently intereviewed in this New York Times Article (titled "An Early Advocate of Stock Options Debunks Himself") by Claudia Deutsch. It's fairly long, so I won't reproduce it here. However, it touches on a wide variety of interesting and relevent topics, including:
  • The perverse incentives arising from option-based and stock-based compensation as it's currently used
  • The agency costs of overvalued equity
  • Using indexed options (options that are adjusted for cost of capital or peer-group performance)
  • Whether options should be expensed
It's worth a look (as is just about anything written by Jensen).