>> The thing that sickens me the most is what the internut stock mania has done to business practices, efficiency, and hard work. <<
Not only is the business not viable from a profitability point of view, they are using fake currency to pay their employees. That fake currency is options. If the stock price falls, the employees may not get the rewards they were anticipating, if the stock price rises as the employees would hope (or were led to believe), or if it falls and the options are repriced, the shareholders suffer from dilution when the options are exercised.
So basically, with AMZN's suppliers receiving options, and AMZN's employees receiving options, the true operating costs are greater than reflected in the accounts. The accounting rules are being reviewed because of this as reported in this story - which naturally cites AMZN as the example:
cbs.marketwatch.com
The article sums up nicely with this paragraph:
On the other hand, if the companies "really accounted for what it was costing them, it's a lot more than people think. After customers get the benefits from lower prices, and insiders benefit from the options, what's left for the public shareholders." |
