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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 12 4:00 PM EST

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To: Berney who wrote (26450)	9/21/1999 1:33:00 AM
From: Jacob Snyder	Read Replies (1) of 99985

re: options: Options are how growth companies get and hold on to valuable employees. Companies get this benefit from the options they give, from the time they grant the options, through the time the options are exercised. It is a form of compensation, often more important than salary or other benefits. So, companies get the benefit now, but the cost doesn't show up till later. It is a way of deferring expenses. Saying that it shouldn't be expensed until the options are exercised is exactly the same as saying that pensions shouldn't be funded until the employee retires. After all, the costs aren't incurred until then, right? What's the difference? There isn't any. A big option overhang is exactly the same as a big unfunded pension liability.

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