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Technology Stocks : All About Sun Microsystems
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To: Scott Meyer who wrote (51897)9/26/2002 6:07:12 PM
From: QwikSand  Read Replies (1) of 64865
 
Scott: Thank you for that answer, and I hope the thread will forgive this slightly OT follow-up.

It seems that you're saying that the company has to have the stock in its possession as treasury stock (or something) from the date of the grant until all the options are either exercised or expired. Is that indeed the case? I wasn't aware that companies had to have capital tied up to back up options from day 1 of a grant (my unawareness isn't an assertion that it's true or false).

If the company does need the stock starting on the date of the grant, I can still only see an expense recognized on the grant date as the present value of the interest on the tied-up capital. The employee has to buy the shares from them at that price when and if he exercises, so why would the whole strike price be taken as an expense? (Of course if they have to go to the market at exercise time, there could be a real expense much larger than the strike price, but that's a different question).

Thanks.
--QS
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