Ignore for a moment the consequences.
You should be a politician <gg>.
I couldn't possibly put it more succinctly than Thomas has, but let me just add that nothing prevents the employee from including the value of the options when she calculates her own net worth / earnings (this is analagous to the income statement / balance sheet). But when the tax man cometh, neither employee nor employer tells him about the options until they're exercised, which is as it should be.
By the way, high-tech option:salary ratios are generally fairly small initially (maybe 1:3), but as employees become more senior, the option values do start to dominate the salaries. Being a peon, I can't know for sure, but I doubt that the example I gave is that out of line for people with that kind of salary at MSFT, or CSCO, or INTC, or SEBL, etc.
Also by the way, I agree that expensing the options (GAAP, not taxes) as they vest is the logical way to do it. This is, from what I understand, how KO will be doing it.
Ethan |
