Employee Stock Options - NQSOs & ISOs Message Board

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Strategies & Market Trends : Employee Stock Options - NQSOs & ISOs

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To: hueyone who wrote (37)	6/14/2002 1:29:22 PM
From: Clarksterh	Read Replies (3) of 786

Huey - To paraphrase from a book on GAAP that I looked at yesterday - 'The difference between the statement of cash flow and the statement of earnings is timing and only timing. Over time the two should end up the same.' Obviously cash flow is about cash (none of which is flowing in a stock option plan), and thus earnings should also be about the same albeit with different timing. Can you tell me from your philosophical point of view how donating shares to charity and taking a charge against earnings (net income) for the market value of the securities is different than compensating employees with stock options and valuing the options at market value minus strike price at time of exercise and taking a charge against earnings? I doubt this is the way it works. Show me a company donating newly issued stock and writing it off from earnings. (Other than through some kind of tax incentive in which case it is also impacting cash flow). my only complaint is that there is no accounting for stock options. As you well know, this is untrue. It is well accounted for under diluted earnings. Clark

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