Stock options reconsidered

On Monday, about 40 students and faculty members congregated in the Newman conference room on the seventh floor of the library building to watch the third annual Oxford Debate.

The topic was on whether stock options should be abolished as a form of executive compensation. It is a highly controversial issue that is debated intensely between those who favor and oppose; the stock option issue made headlines by the scandals of WorldCom and Enron.

The Oxford Debate, as it is conducted at Baruch College, consists of two teams each consisting of one Baruch student, one Baruch professor and one guest speaker. The students open the debate by each taking five to eight minutes to articulate the argument of their team in separate speeches. They are followed by the Baruch professors and then the guest speakers. After all debaters have concluded their speeches, everyone, along with members of the audience, have the ability to pose questions and comments directed at the arguments that have been made.

This year's student debaters consisted of Jae H. Chung, president of the Baruch College Debate Team, and Ravi Gill, a graduate student and former president of Sigma Alpha Delta Honor Society.

Chung, who favored stock options, spoke about the roles of incentives, fairness and accuracy in compensation and the universal nature of corruption.

Gill, who opposed stock options, spoke of the rampant corruption present in current compensation packages while stressing that stock option fluctuations are not on par with the changes in stock prices. He recommended restricted stock options as an alternative compensation package for executives, stating that they were less susceptible to corruption.

The faculty speakers were Jay Dahya, a finance professor and former advisor to the European Union Monopolies and Mergers Commission, and Carol Marquardt, an accounting professor and a member of the editorial board of the Accounting Review.

Dahya, who favored stock options, began by discussing recent scandals. He then defended stock options by arguing that it was the poor oversight of the executive compensation committee that was at fault. He ended his speech with an analogy of "a poor workman blaming his tools."

Marquardt, who opposed stock options, supported Gill's argument that restricted stocks were a better alternative to stock options.

The guest speakers consisted of Greg Libertiny, a senior financial and operations executive and the current chief financial officer of Auburn Bio Diesel Corporation, along with David Morris, a former senior vice president and the co-director of Corporate Accounting Policies at JPMorgan Chase.

Libertiny, who favored stock options along with Chung and Dahya, began his speech by stating that out of the 13,000 publicly traded corporations in America, only 170 of them had stock option scandals. He then argued how stock options helped fuel the growth of so many of America's corporations, and what the alternative would look like without them.

Morris, ironically, was against stock options, although his retirement package from JPMorgan was composed mostly of stock options. Morris claims that although he benefited from stock options, the use of it created perverse conditions in the corporation and within executive committees.

Following the debate and a Q&A session by the audience, the coordinator of the Zicklin Center for Corporate Integrity, Mathew Lepere, concluded the event and informed the audience members that they had the option of voting for the winners by walking through two different exits. "If you leave through the left exit, you are for the abolition of stock options, whereas, if you leave through the right exit, then you are in favor of stock options." The tally at the end indicated that the majority of the audience members were overwhelmingly in favor of stock options to a vote of 30-9.

This semester's Oxford Debate was co-sponsored between Sigma Alpha Delta, the Baruch College Debate Team and the Robert Zicklin School of Corporate Integrity.

The event, which was started in 2004 by Sigma Alpha Delta, is held every semester by the Baruch Debate Team and Sigma Alpha Delta. Ever since the fall of 2005, the Oxford Debate has been co-sponsored with the Baruch Debate Team. After a few highly successful events, the semi-annual Oxford Debate is quickly becoming one of Baruch College's signature events.

Previous events debated topics from FISA and the warrant-less wiretapping, teaching intelligent design in public schools, if the United States plays a positive role in the world and if China is a threat to the American economy.