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Strategies & Market Trends : Employee Stock Options - NQSOs & ISOs

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To: Don Lloyd who wrote (733)	12/19/2004 9:15:07 AM
From: Stock Farmer	Read Replies (1) of 786

Don, Even if the company doesn't have a liability to buy them back, and the shares were given in lieu of cash compensation, then we still have an expense. The question on the table is "how much". You state that the how much is variable, and depends on the date at which (if ever) the company buys back the shares. Apparently the first bee in your bonnet is that since the company is not OBLIGED to redeem the share that this expense is fictitious. Well, we can get into semantics about what a share is, but amongst other things, it is an obligation to distribute an equal share of the assets of the company on dissolution and along the way thereto. And since companies do not live forever (name one that has, and I'll recant), a company is, de-facto, obliged to redeem the share. We just don't know when or how much. The remaining pillar of your argument thus boils down to be "OK, we know that the share is actually an expense, but we don't know how much that might be". Fair?

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