Stock options are not a free lunch.

The article discusses ways in which stock option plans lead to overstated corporate earnings and cost companies more in employee compensation. Topics addressed include the concealment of the cost of options from shareholders, the transfer of tax liability from the company to the employee who exercises an option, and stock option prevalence in the late 1980s and early 1990s. Also mentioned are reduced profits for companies in 1996 if options were treated as a compensation expense.