GVT,
Expensing options sends the right message to all investors, that the main mission of financial statements is to present a FAIR view of a company, not a biased view.
This is nonsense. The main mission of financial statements is to present an ACCURATE view of the company to the existing shareholders, who are the ones paying for the exercise, and the ones with the power and responsibility to react, even if the reaction were only to sell their shares.
While current reporting is certainly far from accurate, expensing options would be far worse. In spite of the straw man arguments made that the opponents of expensing claim a zero cost of option compensation, the fact is that the real cost of a proper (not existing) option expensing plan would fully and completely appear in dilution.
It only requires that one notice the fact that most of the shareholder vote proposals on option expensing are sponsored by union pension funds to realize that the options expensing question is not really about accuracy, but about power. If you think that the interest of CEOs is unaligned with shareholders, compare it with the alignment of the interests of those shareholders with union bosses.
Unions perceive the option expensing question as a backdoor way of influencing, and hopefully looting or destroying, companies whose management, employees and shareholders would never accept union influence voluntarily.
Regards, Don |
