I REFER to the article 'More options granted as shares hit historic lows' (BT, Dec 9).

There is a much larger issue that needs to be addressed than the granting of options in unethical ways. This is the whole system of performance-based compensation in the management and running of public companies.

One of the causes of the world economic crisis is the way that players - in, primarily, the financial industry - have been compensated based on performance. This performance-based remuneration system resulted in society's best educated and most talented individuals making choices driven by greed for short-term personal gain which went against the long-term interests of their companies.

Consider the bonus culture that drove bankers to take excessive risks - leaving shareholders, governments, employees and society in general to clean up the resultant mess and bear the pain of the current economic downward spiral.

Why should the management of companies be compensated differently than the average worker who gets paid according to the value added by his efforts? If a worker doesn't perform, he will quickly be looking for another job. Logically, it should be no different for managers or executives: they should be paid according to the value they add to the organisation.

If they don't perform to the expected standard, they should be dealt with in the same way any other employee can expect. The fact that they might be the best and brightest individuals has not hindered the ability of some to create havoc, assisted by performance- based compensation systems.

Current practices of compensating executives on a performance basis encourage unethical, self-interested decision-making that can be detrimental to their organisations and society as a whole.

Robert Stone
Singapore

This article was first published in The Business Times on December 11, 2008.