Well, I don't think that there is anything that covert about it.
The covert part about this is fooling the American public into thinking the business performance of many companies, including Oracle, is better than it really is by failing to properly expense stock options on the income statements. This accounting treatment is inconsistent with any kind of other share based payments and this fraudulent accounting loophole is only allowed to continue because of money going to the Washington politicians from the tech lobbies.
I am not against stock options, but I am in favor of properly accounting for them on the income statements. I have already demonstrated how billions of dollars of Oracle's earnings has disappeared from shareholders equity into share buy backs in an attempt to partially offset stock option dilution. So long term shareholders end up paying the expense of stock options one way or the other---irregardless of this fraudulent accounting. Oracle and other companies should fess up to this expense; just because they do not recognize the expense and report it, doesn't mean that shareholders do not suffer the adverse consequences of this expense.
To his credit, Oracle CFO Henley has admitted stock options have an economic value and that Oracle would "consider" voluntarily expensing stock options. And as I also posted, Oracle currently comes across better than many tech companies on S&P Core Earnings measures, which include stock options expense. I think this is because Oracle was much more profligate with stock options in the nineties than they have been the last four years. Perhaps Larry was temporarily satisfied by the 706 million he netted from selling option based shares in 2001 (that were granted in the early nineties and would have been expensed a long time ago according to the Black Scholes method).
Here is a link where Robgera previously posted about Oracle CFO Henley's comments about expensing stock options:
Mr Henley says that Oracle has long accepted that options "bear an economic cost", and the company would consider expensing them voluntarily.
However, he also believes that the way the cost of options are calculated has not yet been resolved, and intends to play a full part in the debate that shapes that decision.
Message 18152204
Unfortunately, the link to the Yahoo article quoting Henley no longer seems to work. Perhaps the AEA or TechNet lobby asked Henley to retract his comments.<ggg>
Regards, Huey |
