mindmeld, re "Cisco just issued 141 million options to employees. That is a huge number, which is not "far fewer options" than have been granted in the past."
Over the last eight years ...
... Granted option shares has declined from a high of 384MM in FY97 to a low of 199MM in FY03. If no more are granted during FY04, the 141MM you cited would be a new low. The 8-year total grant of 2.2
... Total reported profits would have been 53% lower (6559/12462), if options expense had been reported per SFAS 123. The 35% hit (1259/3578) for FY03 is mild by comparison.
... If your preference is expense based on option fair value upon grant, it has risen from $41MM in FY96 to $1,691MM in FY01, and since declined slightly to $1,259MM in FY03.
... If your preference is expense based on exercise, it has risen from $369MM in FY96 to $5,714MM in FY00, and since declined significantly to $245MM, with a low of $113MM in FY02. This reflects the current underwater condition of many options, and lower CSCO prices for those options not underwater.
... A total of 2.2 billion shares were granted, and 1.1 billion shares were exercised. Of course, some of the grants were cancelled.
THE BORING, GORING DETAILS. Below is an updated Cisco options expense table using John Shannon's #reply-18560306 as the starting point.
When examining the table, keep the life cycle of options in mind. The fair value, per SFAS 123, of options granted one year are amortized over the following years and then reported as the SFAS 123 option expense. Yet later, the options might be exercised, and a "tax benefit due to option exercise" is reported. Except for the after-tax cost based on exercise, all values are directly from the Ks. This after-tax cost is calculated assuming a 35% statutory corporate tax rate.
<Based on SFAS-123><Based on Exercise>
Options GAAP SFAS-123 AfterTax Tax AfterTax
FY Granted EPS EPS Cost Benefit Cost
03 199 $3,578 $2,319 $1,259 $132 $ 245
O2 282 1,893 373 1,520 61 113
01 320 (1,014) (2,705) 1,691 1,755 3,259
00 295 2,668 1,549 1,119 3,077 5,714
99 245 2,023 1,487 536 837 1,554
98 282 1,350 1,109 241 422 784
97 384 1,051 899 152 274 509
96 317 913 872 41 198 369
Sums 2,234 $12,462 $5,903 $6,559 $6,756 $12,548
Regards, Ron |
