Tuesday morning headlines

New ways to cheat: But you have to be a corporate executive who is already manipulating his stock option grants. The WSJ cites an SEC economist who has found evidence that playing around with stock options has been done as a tax dodge. From the WSJ:

The reason it can be tempting to backdate the exercise of options lies in the way the Internal Revenue Service treats different types of income for tax purposes. Options, a common part of executive pay packages, give the recipient the right to buy a company's stock at a fixed price in the future. That price, known as the strike price, is usually the stock's market price on the day the options were granted. About three-quarters of the time, executives immediately sell the shares they buy when they exercise options. Under IRS rules that typically apply, those executives must pay ordinary income tax, as well as payroll taxes, on the difference between the stock's value on the date the option was exercised and the option's strike price. The highest federal marginal income tax rate is 35 percent.

But not everybody sells immediately - and those who hold onto their shares for at least a year pay a much lower capital-gains tax on any profit between the time they exercise and when they eventually dispose of the shares. That lower rate, says the Journal, gives the executive an incentive to exercise the options at a relative low point for the stock.

Sony winning at box office: The world box-office take for Sony Pictures is already over the $3 billion mark, thanks in part to "The Da Vinci Code" and "Casino Royale," and the studio is on track to place first in the annual box office derby. Here's what industry analyst Paul Dergarabedian told the DN: "They've aligned themselves with great talent and great filmmakers as an insurance policy for long-term success. On top of that, you have a marketing and distribution team that is perfectly in sync with what the marketplace wants. It's held them in good stead this year." Sony's performance compares with its lousy showing in 2005, when it placed eighth among the major distributors.

Sticker shock: The EPA has changed the way it calculates fuel economy and the results are likely to bring down the numbers. As an example: A 2007 Toyota Prius now gets 55 miles per gallon in combined city and highway driving, but the 2008 version will likely get 44 mpg. The changes reflect a long-held belief that the fuel ratings didn't reflect real-world driving, such as being stuck in freeway traffic.

New look for Web rankings: Specifically, the appearance of old media companies through their various Internet units and divisions. Last month, Fox Interactive Media, Time Warner, Viacom and Comcast ranked among the top 10 sites in terms of page views. Note the appearance of Fox, which can now include MySpace in its page count. It was the first time Fox beat out Yahoo in that category.

Golden (and cheesiest) state: California is about to become the nation's top cheese producer, which doesn't exactly sit well with dairy farmers in Wisconsin. The Wisconsin folks pooh-pooh the slide, saying that the state still makes the best cheese. OK, but what happens to those cheeseheads at NFL games>

Power woes?: Socal utilities could be forced to curtail power next summer, according to a new state forecast. The forecasts take into account the likelihood of extreme weather and outages at power plants and transmission lines. DWP isn't included in the forecast because the municipal utility does its own power planning (wonder how many power lines DWP has replaced after last summer's troubles).

Relief on the way: Caltrans has recommended that L.A. County receive $1.5 billion in infreastructure bond money to widen freeways. That's less than the $1.7 billion sought by the MTA. The final decision on how the money gets divvied out will be made in February by the California Transportation Commission. One of the Caltrans recommendations: construction of a southbound carpool lane on the 101 Freeway for nearly 40 miles in Ventura and Santa Barbara counties.

Lacter on radio: This morning's KPCC business chat with Steve Julian (6:55 and 9:55) covers the service problems at Time Warner Cable, the costs of luxury condos and possible redevelopment of the area near the Queen Mary in Long Beach.