Perhaps you can explain this...
As I see it, the practice of granting options augments employees' income. Employees receive income because they perform work for the company: No work, no income. In most jobs, wages are tied to profit generating productivity. Typically, the guy sweeping the floor is paid below the guy who invents the products.
Now, if CSCO employees are raking in millions doing work that is normally compensated at significantly lower levels at other companies, one can argue that resources are being allocated somewhat less than perfectly. The responsibility for compensation levels falls on management's shoulders, and they have some options on how they choose to account for it. However they report the practice, the end result is the same: Someone benefits and someone else gets shafted.
The question investors must ask is "Am I getting screwed?"
It appears that CSCO employees are benefiting at the expense of the tax man, and CSCO shareholders are sorta tagging along for a bit of a free ride. So far, free riding has been marvelous. How far one can travel is another question. If I understand your recent posts, you think the ride will soon end. Others disagree.
Investors will be well served if they clarify in their minds exactly what is, and has, been going on. The recent posts discussing the matter is a useful step in this direction.
Thank-you for participating.
Cheers, PW.
P.S. Where am I wrong? |
