Executive options were actually a reform, to align the interests of executives with those of stockholders. They worked in one direction (up), but not the other--once the options were "under water", the executives had no reason *not* to "swing for the bleachers", risking whole company.
The solution is to align in *both* directions, so that the executives lose when the company loses, not just wins when winning.
This could be accommodated with a couple of changes in the tax code. Require a large part (majority) of high compensation to be in the form of stock: if your pay for the month is $100k, you get $60k of that as stock at current market prices. We need a (politically unpopular) tweak: this would currently create taxes on $60k. Instead, give the stock at a 0 basis, so there is no tax now, but the entire amount is taxed when sold--and require that the shares be held for a minimum number of years.
At this point, when the shares go down, so do the executives' worths. with options, stock going down merely increases the incentive for risky behavior seeking high gains.
But what do I know--I just have a Ph.D. in economics.