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Politics : The Honorable Joseph Lieberman -- A Liar -- The Bottom Line
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To: John Pitera who started this subject7/24/2002 12:16:14 PM
From: Jorj X Mckie1 Recommendation  Read Replies (1) of 25
 
Without diving into the whole issue. Is "expensing" options really the proper solution? Is it addressing the right problem?

I don't believe that there is an accurate way to expense stock options that vest over a several year period. How do you account for people leaving before they vest and how do you account for stocks that move downward. There are very few options in tech that were issued in the past two, three or even four years that would be worth anything now. And yet the company would have to expense them up front.

From our conversation yesterday, Greenspan finally said something that I agree with. He said that there is nothing that you can do with options that you can't accomplish by simply assigning the actual stock.

I believe in the idea of employees being given a stake in the company that they are working for. And believe that it is necessary in fast moving competitive areas such as tech so that smaller companies can remain competitive in the hiring market.

If a pre-ipo company wants to offer options, I don't think that there should be any regulation. But I believe that we should start looking at the idea that once a company goes public, that they should switch to direct stock assignments that can be accurately expensed on the spot.

I do think that Lieberman's argument about a double penalty of expensing and dilution is specious. The fact that the company is penalized with the dilution of the stock should have nothing to do with the accounting of the company.
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