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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 79.52+0.8%3:59 PM EST
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To: willcousa who wrote (61146)8/29/2002 3:27:06 PM
From: rkral  Read Replies (1) of 77400
 
OT ... willcousa, are stock option grants an expense?

How can a stock option be an income statement activity if you printed paper at a nominal cost and traded it for services?
Your phrase "traded it for services" is already an explicit admission that the stock option is compensation.

How is that different from selling that same paper?
By "paper" you could mean the option contract or the stock certificate issued upon exercise. Since we are talking about the option grant here, I will assume you mean the option contract. That is the "printed paper" on the day of grant.

If the company had sold that option on the open market, the company would have collected an option premium, that is, cash. But the company bartered for services and granted .. gave .. that option to the employee instead. The amount of the option premium .. that the company didn't receive .. is compensation to the employee. And I repeat, employee compensation is an income statement activity. The fact that the option grant resulted in a net cash-flow of zero is irrelevant.

Whether you get cash or something else for the paper should not be relevant.
Exactly. Whether the employee receives cash or is granted a stock option, both are compensation.

Ron
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