I am a professional compensation manager. It is very frustrating for me to see the uninformed reporting about President Bush’s compensation package at Harken Energy. Bush did not get “sweetheart” loans or get anything more than nearly every executive receives as part of his compensation package. More than 50 percent of most executives’ pay comes from long-term incentive plans. Nearly all of those are designed to reward executives if they increase the market price of company stock.
To create this reward system, companies allocate to executives stock options, or stock appreciation rights, or loans to buy company stock. In Bush’s case they gave him a loan to buy company stock. The incentive plan worked so that if the management team was successful at raising the price of the stock, Bush could sell his stock, pay off the loan and keep the gain.
This was not a free gift but a part of Bush’s salary. And it is extremely common.
When Bush sold $800,000 of his stock, it was not insider trading, as alleged, because the entire market understood that Harken was losing money. It would only have been insider trading had Bush had special knowledge the market did not have. And, as proof of that, the price of Harken stock did not go down soon after Bush sold.
That is why the Securities and Exchange Commission investigation of the sale cleared Bush. Had the stock price gone down after the sale, it would have been much more likely Bush would have gotten in trouble.
The truth requires hard work to understand. Most reporters have no desire to try and understand this. They just want to nail someone.
