RealMoney Radio: A Little Healthy Cynicism

Cramer says that investigations into backdated options are forcing him to look through a new lens.
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"As much as I tell you what I did see, let me tell you what I didn't see," Jim Cramer said on his

"RealMoney" radio show Wednesday.

Cramer drew attention to the proliferation of press stories about executive compensation and how new revelations blindsided him.

It seems that a number of public companies are being investigated by the Justice Department, he said, adding that was a much more serious matter than being quizzed by the

Securities and Exchange Commission


The SEC can fine market participants or even ban them from the business, but it is always a civil-litigation matter, he said.

That's a huge contrast to the Justice Department, which can send violators to prison. "If the Justice Department calls, you need a criminal lawyer," he said.

Some company executives are alleged to have backdated the strike price of their stock options to the lowest price level for the quarter. That way, the executives that were granted the options can bake in an instant profit, Cramer said.

He said that when he was granted stock options at

at $3.30 in the late 1990s, "immediately the stock fell, and I was out of the money."

But "I didn't go back to the company and ask the company to reprice the options at a lower level."

That's exactly what some executives seem to have been doing, Cramer said "It's killing me, because I didn't think anyone would do such a thing," he said.

"I'm a cynical guy. I believe public companies run themselves much like private companies," he said. The only difference is that public companies disclose what they pay their executives.

"Now I discover that I didn't know what they were paid," Cramer said. "I was dead wrong, and now I'm losing money because I wasn't cynical enough," he said.

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James J. Cramer is a director and co-founder of He contributes daily market commentary for's sites and serves as an adviser to the company's CEO. Outside contributing columnists for and, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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