Clown-Free Zone... sorry, no clowns allowed Message Board

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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: Perspective who wrote (26207)	10/10/2000 11:19:57 AM
From: pater tenebrarum	Read Replies (1) of 436258

i know that. BUT : they treat the stock options issuance as an expense for tax purposes, which enables them to claim the tax credit. however, the expense is not recognized as such in their p&l statements. so it DOES influence their earnings, if only indirectly. were they required to pay their employees in cash instead of options in commensurate amounts, their profits would be gone. and the tax rebates are REAL money. what it essentially amounts to is that the burden of paying employees has been shifted from the corporation to existing shareholders. there has been an extensive debate as to whether the issuance of options really represents a cost to the corporation too. imo, yes. it is a hidden cost, because it's an opportunity cost. after all, when shares are being issued at market value as a secondary offering, the corporation would take in more money than it does when issuing shares below market value to employees. bottom line is: whether you get a $1,8bn. tax rebate or not (CSCO) does make a difference, no matter how tortured your accounting.

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