Carly Fiorina in "Corporate Leadership and the Crisis" (op-ed, Dec. 12) describes how fraud occurred at Enron, WorldCom, Adelphia and many companies involved in the dot-com bubble "because
management teams decided that quarterly earnings and a rising stock
price trumped ethics." But she dances around the main driver of the
problem: equity-based compensation schemes for executives.

Ironically, another article in the same edition of the Journal describes how $1.7 trillion
of shareholder cash was vaporized by S&P companies in stock
buy-back programs just in the last four years. How much better off
would shareholders have been if the $1.7 trillion had been returned to
them as cash dividends rather than used to buy back stock, one
consequence of which was to put executive compensation plans even
further into the money?

The events of the last few years have shown conclusively that
equity-based pay creates an irresistible conflict of interest for
management. Equity-based pay aligns management's interests, not with
the shareholders, but with the share sellers. It is long past
time to put an end to this ridiculous charade. Companies that pay their
executives with any form of stock or stock options should be forbidden
to use corporate cash to buy back their own stock. At the very least
this reform would prevent equity-crazed management from using the
shareholders' money to

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