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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 174.54-1.2%3:59 PM EST
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To: Peter J Hudson who wrote (114187)2/24/2002 5:08:50 PM
From: Wyätt Gwyön  Read Replies (1) of 152472
 
I still think the potential cost to the company is the difference between market price and strike price at the time of the grant, but either way the cost to the company is small

i disagree--this ignores the time value of the option. if the co wanted, they could sell options on the market. e.g., DELL and MSFT have sold tons of puts. cos. are basically giving calls to their employees and booking the cost at zero. (worse, some cos actually include the tax credit from option gains in their operating income.) but if they sold them on the market they would not part with them for zero or for the mere difference between the strike and the current equity price.

rather, they would part with them for a value determinable according to the Black-Scholes formula, just like regular options! so i think they should book that cost when they give calls to employees.

The wealth created for QCOM employee's by participation in company stock incentive plans is a success story not a scandal.

i certainly don't think it is a scandal! it is all above the board. but that is not the same thing as saying companies present their true economic costs in their financial statements.

i don't think the problem is at all limited to QCOM. it is systemic. i would like to see the system reformed so that cos have to report the cost according to market value.
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