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Strategies & Market Trends : Zeev's Turnips - No Politics

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To: Joseph Beltran who wrote (61431)5/3/2002 3:31:12 PM
From: Casaubon  Read Replies (2) of 99280
 
that's just ignorant. Those options are part of a remuneration package. If the employees were not compensated with options, they would have been compensated with higher pay packages, thus diminishing the earnings of the company. Otherwise, the employees would have gone elsewhere and the company would have no R&D and then eventually go BK due to market competition stealing market share. I believe the options grants are tax deductible for the issuing company making it a win-win for employee and company. The share holder must recognize the cost as a dilution to earning. Shareholders must understand this cost to properly assess the value of a company. A soon as options are granted, they must be assumed as fully dilutive to earnings. I also believe a cost to the company should be booked to represent the time value premium of the options granted. This is what has been ignored by current accounting practices; nothing more, IMO.
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