re: "But if the company grants 5% ownership to employees each year, the equity will only be about $1.70. Therefore, I believe there is less grey if the company tells me the EPS was $0.14 per annum."
Ron, that argues for disclosure of the detail of the grants, not some value established by a bunch of gamblers. With clear disclosure of the grant detail and recent vesting and exercise rates, it would be easier for an investor to determine the possible impact on EPS based on various scenarios... stock goes up or down (if down no dilution, but probably bad news anyway) , if X% of options actually vest and get exercised versus Y% or Z%. And you could require companies to clearly disclose historical data on the options program in a standard format so investors might have a better chance of making a more educated comparison. If FASB pushes this through, and Congress stays on the sideline, there will be a much greater opportunity for companies to "fudge" the numbers, and/or there will be a greater opportunity for all those lawsuit mills to bring investor lawsuits claiming the expense numbers were incorrect. Let's keep it simple, disclose what they know as fact, and let the investors decide if that is good or bad for the future value of the stock.
I am not in any kind of option program at this time; I truly believe that expensing options is not going to help investors, and may infect have some much worse consequences then just requiring disclosure of the program details.
Nitt |
