With the market tanking, it might be a time for many companies to consider switching back to options to reward executives. Unless you think the market will collapse again, options could turn out to be lucrative because there would be only one to go.

But London Business School professor Freek Vermeulen warns that this would be disastrous. Writing in the Harvard Business Review blog, he says it will only encourage more risk taking behavior, something we could well do without given the problems that's already caused. He says the problem is that the boss on an options package is more inclined to take risks, without any of the downside for themselves. " Options, as you might know, represent a right to buy shares at a certain price at some fixed point in the future. If you are given the right to buy a share in company X for $100 in January 2010 and by then the share price of X is $120, you will have made 20 bucks. However, if the company's share price by then has dropped to $90, your option is worthless. We then say it is "out-of-the-money"; you're not going to exercise your right to buy at 100 when the market price is merely 90. In that situation, if the CEO of X has many stock options, it stimulates him to be very risk seeking. For example, if by August 2009 the share price is 90, he will be inclined to engage in risky "win or lose" moves. If the risk pays off and the share price rises well above a 100, the stock options will become worth a lot of money. However, if he loses, and the share price plummets even further, say to 60, no worries; it doesn't matter. The stock options to buy at $100 were worthless anyway; whether the stock trades at 90 or at 60."

So they are inclined to make bigger bets. And worse still, the evidence suggests they're the wrong bets.

It's an interesting argument but one that would require an entire rethink of remuneration packages.