Oracle Corporation (ORCL) Message Board

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Technology Stocks : Oracle Corporation (ORCL)

ORCL 217.62

-1.0%

11:29 AM EST

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To: hueyone who wrote (17786)	1/10/2003 10:58:41 AM
From: Hardly B. Solipsist	Read Replies (1) of 19079

Telling the tax man one thing and shareholders another is a consequence of the tax code, not some plot on the part of boards to defraud people. The current tax code encourages the use of stock options, and this was (according to what I've read on the subject) the one of the intents of legislators involved. Perhaps there was some secret meeting in a swamp where they were handed big sacks of money for this, but it's also possible that they felt that it would be best for the economy. What members of the Oracle board have proposed doing is to have the quarterly statements contain separate accounts of the probable costs of outstanding options valued by various means. As one of them pointed out at the company meeting last October, using Black-Scholes would have resulted in a very large expense for the options they granted at the height of the stock price (those 20M shares that Ellison got), and now those same options would be in the earnings column, which is clearly absurd (and which makes the original expensing of them via that method absurd). The fact is that if ORCL stock gets over 40 again before Ellison's options expire (which might be a result of his eventual retirement instead of the legal limit on the options), the I doubt that most shareholders will mind his making another big pile of cash. If I had held Oracle stock since 1991, I would have been even less likely to begrudge him his recent payday (and I still didn't). But just because I don't think that ORCL has abused stock options doesn't mean that I think that there aren't many companies (perhaps it's even a majority) that do. The main problem with eliminating options for tech companies is that this would mean that the only way to make any money would be to get there pre-IPO, and that would hurt the growth of the winners. And simple-minded expensing of options works less well for tech companies because the stock is more volatile. And finally, companies that are inclined to cheat would just use deferred compensation plans (which they already do) or something even more opaque, to overpay the senior executives (the only people that get options in these companies).

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