The most egregious case of let’s-not-face-up-to-reality behavior by executives and accountants has occurred in the world of stock options. In Berkshire’s 1985 annual report, I laid out my opinions about the use and misuse of options. But even when options are structured properly, they are accounted for in ways that make no sense. The lack of logic is not accidental: For decades, much of the business world has waged war against accounting rulemakers, trying to keep the costs of stock options from being reflected in the profits of the corporations that issue them.
