If a corner office with a great view isn't compensation, what is it?
If a 'most valuable employee' award isn't compensation, what is it?
If a plaque for distinguished service isn't compensation, what is it?
If the close in parking place isn't compensation, what is it?
Trying to live in a zero sum world is sometimes pointless.
Should we offset the 'cost' of such (mostly) intangeable compensation with the benefit the company (we hope) gets from increased productivity? Should we record a 'cost' based on what we might get by auctioning off the 'compensation'? No need to 'predict' a future value.
Stock options, beyond dilution, have NO COST. In fact, the company gets paid. If the grantor didn't think it would derive benefit from the grant, would it not simply sell the stock to start with and put proceeds to 'good use'?
Of course, if the grantor is going to 'expense' the grant, then why not simply buy calls for the exersize date/grant price? One expense is the same as another, isn't it? If that's not an expense, then what is it? No 'prediction' involved. The open and free market has determined a value certain. And, no stock dilution involved. All clean and up front.
To get more capital, perhaps the company could sell calls instead of selling stock into a public offering. Can't go wrong, since the option market will have 'predicted' the correct future price of the stock along with correct premium, and the co. gets use of the premium in the interim AND gets the value if call exercised. And, if you combine selling calls with selling puts to hedge ... Since the company makes the stuff (stock), all calls are/should be covered, right? |
