1. It would require that the company limit disclosure of a lot of the terms of its executive compensation plans. Insufficient disclosure is the cardinal sin of corporate governance.

2. Nobody would believe that the board wouldn’t tell management. First, management is also usually on the board. Second, management gets to nominate the directors, and management’s nominees almost always win.

3. Management needs to release financial reports and needs managerial accounting to run the company. I have no clue how this could be done and still keep them in the dark as to the value of the compensation package.

4. Management would just demand much larger cash salary payments, which would trigger even more excise taxes (for excessive compensation) and be totally counterproductive to the goal of bringing management and shareholders interests in line.

5. There are lots of other problems with the idea, but I am lazy.

Additionally, the backdating problem is one that is located pretty firmly in the past. The companies most involved were tech companies back in the late 90s. SEC reforms that require grants of options to be disclosed almost immediately have made this problem mostly disappear.

As to metrics, the problem is that the only real metric is share price. Options are popular because if the strike price is the price of the shares on the date of the grant (or it could be more I suppose), a corporation won’t be taxed on them. The only thing that you could really fool with is the vesting period, since management doesn’t really like any kind of metric other than share price and thats all the shareholders care about anyways.