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Politics : Ask Michael Burke
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To: Simba who wrote (71195)12/1/1999 12:49:00 AM
From: Exacctnt  Read Replies (2) of 132070
 
Simba, Like it or not, current accounting rules allow a tax credit for employees exercising stock options with no expense reported on the income statement.

If the accounting rules were changed and option gains were expensed then the rules should also change in how the number of shares in the calculation is derived. Currently, fully diluted EPS factors in in-the-money options shares in the denominator. EPS would take a double hit if options were expensed by the fact that it would lower earnings and also increase diluted shares outstanding.

I don't think that I've heard anybody discussing a need to revise the shares outstanding calculation whenever the topic of expensing options is mentioned.

Regards
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