Would you agree to conclude from the last line that I highlighted, that the pre tax stock option compensation expense estimate using Black Scholes is generally amortized over three or four years (vesting periods) and that Siebel's corresponding after tax reduction of 766M is not just reflective of the Black Scholes estimates of the value of grants handed out in year 2001, but instead is reflective of the aggregate sum of a portion of the estimated value of grants handed out in 1998, 1999, 2000 and 2001 (or whatever the vesting period is)?
I agree .. with just minor exceptions.
Exception 1: The $766M includes not just the "aggregate sum of a portion of the estimated value of grants" for several years, but also includes $54M due to exclusion of the FY01 tax benefit due to option exercise.
Exception 2: Siebel stock options generally "vest ratably over five years", and based on my amortization "testing" with QCOM options, my educated guess is that Siebel's amortization exactly follows the vesting schedule. The estimated value of grants that occurred in FY01 will be amortized 20% each in FY02, 03, 04, 05, and 06. Similarly, options granted in FY00 are amortized 20% each for FY01 thru FY05. The oldest options to affect FY01 would then be those granted in FY96 and amortized in 97, 98, 99, 00, and 01. So five numbers are added for a "vest ratably over five years" scenario. (FY01 might have only 4 years .. since FY96 grants might not have to be included .. since that's about when FASB SAFS 123 began.
As to the Wall Street Journal article, I agree with every word .. a qualified agreement since my knowledge of the intrinsic value method is nil.
Ron |
