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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 155.82-1.3%3:59 PM EST
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To: bafi403 who wrote (122073)7/25/2002 7:59:07 AM
From: samim anbarcioglu  Read Replies (1) of 152472
 
Bafi, the only difference between the first version and the second version of your health insurance analogy to stock option grants is who is the payor for the health insurance; the company or the individual. However, the nature of the product i.e. health insurance coverage has not changed. It is still a consumable product, which has a cost/day. Whereas stock options don't work that way. That's my point. Health insurance premiums are the price of coverage (peace of mind from disastrous bills) for the period. Whether there are claims against the insurance policy is not relevant.

I think that exercised stock options should be expensed, but not before they are exercised. At the time of exercise, the difference between the cost to the employee and market value of the grant should be treated as expense to the company. Further, to keep all of it simple and equitable, companies should be forced to obtain these shares in the open market only, or give them out from the stash in their possession. Issuing new shares thus diluting existing float should be disallowed IMO. The liability of the sum of all yet unexercised, but in the money (from the employee's perspective) option grants should be shown in the company's book as debt.
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