Lehman Brothers Holdings Inc. (NYSE: LEH) is trying real hard to convince its Gucci-clad workforce not to abandon ship.

According to CNBC, employees will receive 20% of last year's bonus in stock that vests over three years. "Lehman's decision to issue additional stock to employees is being interpreted by some in the market as a sign that the Lehman is not planning to sell itself for a below-market price," writes CNBC ON-Air Editor Charlie Gasparino.

Hmm. Didn't the same conventional wisdom believe that Bear Stearns was too big to fail and that the end of the write-downs at Wall Street banks was near? So, pardon me if I am a little skeptical.

As Fortune magazine notes, Lehman, like other Wall Street banks, got itself into trouble by making scores of bad real estate investments.

"Because it prided itself on real estate expertise - it helped popularize real estate-backed securities in the early 1970s - and investment prowess, Lehman risked far bigger proportions of its own capital doing deals than its major competitors did," the magazine notes. Little wonder that the stock is down more than 65% this year.

Sorting out through this mess will take years. Any Lehman employees who were smart enough to get hired probably know a bad deal when they see it. This well-timed leak to CNBC is part of Lehman's efforts to avoid becoming the next Bear Stearns.

For now, the ploy is working. Shares of the New York-based investment bank are trading up on the news -- Lehman shares closed up 6.68%. Over the long run, though, investors and Lehman employees will see through the smokescreen.

The significant declines in share prices at many of the big financial companies have left executives and employees in an unenviable position: many hold options that are badly out of the money (subscription required) and, at companies like The Bear Stearns Companies, Inc. (NYSE: BSC), have literally no chance of ever realizing any value.

Executive pay consulting firm Steven Hall & Partners reports that 55% of Fortune 500 financial services and insurance companies have options with an average strike price that puts them underwater. At Countrywide Financial Corporation (NYSE: CFC), the current share price is about 86% lower than the weighted average strike price of the options held by employees.

All of this presents an interesting executive compensation quandary: the purpose of options is to give executives an incentive that allows them to profit alongside shareholders. But options that are so out of the money as to be hopeless accomplish nothing. What effect might this have on performance? Activist investor Daniel Loeb opined on this very issue in a letter to Star Gas Partners CEO Irik Sevin back in 2005: