"Option exchange rules have little to with FASB accounting rules. Believe it or not, the FASB addresses this topic in SFAS 123. For example, it says ..."
These rules and others for establishing the expense "value" of an option are the problem. Stock options are clearly unlike open market options. If forced to expense that “value” of options on the financial statement, companies will massage the answer and the average investor will be lost when it comes to figuring our how a stock option might actually affect a company's bottom line, future EPS, and that same companies stock price. Intel's and other rational companies and people's arguments have been that we do not need to add grey to the balance sheets. Clear detailed discloser of options, the aging of the options as well as what type of employees get what size option and at what price would help investors determine if they believe the practice will positively or negatively impact the bottom line of the company, EPS, and potential future value of stock. It sounds good to say we will get all those "Fat Cats" who grant themselves options, especially in the wake of Enron, Worldcom, etc, but what some forget is that having employees at all levels invested in the success of the company is in the best interest of the average shareholder. Let’s support consistent disclosure of options by companies and let the market decide if they like what the company is doing.
Nitt |
