Hi GV, RE: "It is silly to have a policy that produces inaccurate financial statements. Stock options should be expensed because financial statements are designed to provide an accurate picture of the financial status of a company."
Expensing options does not provide an accurate picture. It would provide a grossly distorted picture.
Message 18537262
"Dennis Powell, Cisco's controller, said the company continues to believe stock options shouldn't be expensed, because they can't be fairly valued. For example, the options Cisco granted for the fiscal year ended July 2001 were valued at $3.3 billion. Today, using the same statistical model, those options would be valued at $131 million, because Cisco's stock price has dropped precipitously, Mr. Powell said."
From my other post, if a public company is heavy on options but light on base, they save a lot of money that may be plowed into RND, esp important during hard times, yet reward for performance when it is most cost effective to do so. But if they are charged for this, they may start turning their comp plans into a plan that's more appropriate for the slower growing dividend-based companies, the lower growth style comp plans, as well as change the overall comp structure (of how many & who gets options.)
RE: "Changing the rules ... won't change the operations of a company."
I (respectfully) disagree. It would.
Btw, last I checked, expensing options wasn't close to making it through any Congress initiative (there were a lot of proposals). Has something changed recently?
Regards,
Amy J |
