OT ... John, a well presented post as usual.
I believe you are incorrect in two areas, however, because of the following paragraph:
Even if it did turn out to be tax advantageous, there is the effect of tying up one's capital, time value of that capital, and assuming risk of downside depreciation. There are a lot of folks throughout tech-land sitting on shares exercised early that now aren't even worth the taxes paid.
First, imho the time value of capital is not a consideration in your comparison since the only capital involved was created by the exercise of options.
Secondly, imo sitting on some shares is better than not having exercised any options, should the stock fall below its price on the exercise date. In your comparison, if the price of the stock falls all the way to the exercise price, the party that exercised at least has 520 shares worth $5200. The party that did not exercise has nothing. As you said, it's important to do the math. <g>
Regards, Ron
P.S. In a previous post, I said you had me 99.9% convinced (an oxymoron?) of your evaluation method of the costs of employee stock options. You were equating the company's position to that of an uncovered (naked) call writer (my words, not yours). Now after having studied the situation more, I strongly disagree with you. I would like to try to convince you that you are wrong. Do you think the thread can stand any more of this topic? Let me know if you would rather use PM. |
