Huey, I don't even like Lieberman, but I'm ruffled by your allegation. Certainly this isn't a matter of public record, or Joe would be in the slammer by now.
I am not alleging that Senator Lieberman did anything illegal, so I will change my statement to, that in my opinion, Senator Joe Lieberman was heavily influenced by lobbies.
The concept behind stock options is that they are worthless at the time they are awarded, and only become valuable if the company does well.
The concept that stock options are worthless when granted is absolutely absurd in my humble opinion. If stock options are worthless when granted, why did people accept them in lieu of cash for all kinds of services or products rendered during the bubble---painting houses, rent payments, for legal services, etcetera. Not only that, but according to Buffet, the day an employee receives an option, he can engage in various market maneuvers that will deliver him immediate cash, even if the market price of his company's stock is below the option's exercise price.
Wouldn't that be a stock grant as opposed to a stock option?
I don't know, but I doubt it is relevant. We can change the example to price the option at market price at date of grant and let the stock subsequently appreciate and go through the same exercise. I can make the same conceptual, economic equivalency argument at any price level you want, but I purposely made that simple argument to drive home the inconsistency in not recognizing an expense in the first instance and recognizing an expense in the other instance when all that is happened is that value from one share ends up going directly to an employee in the first case versus indirectly to an employee in the second instance.
Did you read the article by Dr. Pacter? Which points did he make that you disagree with?
Best, Huey |
