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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 76.94+1.1%Nov 28 9:30 AM EST
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To: rkral who wrote (64701)9/17/2003 8:18:55 AM
From: Boca_PETE  Read Replies (1) of 77400
 
rkral:

YES - The option price on grants from Non-qualified Employee Stock Options Plans can be less that market value at date of grant, but for me, the nontransferable provision of employee stock options make them worthless. If they can't be sold, IHO their value is ZERO.

Also, the quoting of sources that believe in assigning value using the same valuation methods on traded options and non-tradable employee options in support of why you believe options should be valued and expense does not refute any of the basis upon which my opinion to the contrary rests. In my experience preparing the disclosures you mention, company managements see them as an absurd waste of time and cost because they see them as meaningless and flawed. That's why 98% of companies chose to continue with the APB 25 methodology I support which views and treats employee stock options as capital raising transactions. Black Scholes is great for traded options - it makes no sense for nontransferable employee options.

I guess we will have to agree to disagree on the issue of expensing employee stock options. I have no vested interest in the issue since I am now retired - just an interest in seeing rules that require a realistic accounting and reporting of them and their impact on dilution so that shareholders can easily see which companies abuse the vehicle.

P
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