**OT**
Dennis, there is an article "Stock options are not a free lunch" on the current issue of Forbs Magazine (http://www.forbes.com/forbes/98/0518/6110212a.htm ).
Basically, he discussed two negative factors:
1, Based on the current accounting rule, a company does not have to state option-granting cost as employee cost, so the reported earning number is overstated.
2, The granted options, when they become in-the-money option, will dilute earnings.
After reaing the article, I have a few question. As a CFO and CPA, would you help me to understand this better?
1, Why it cost the company to grant options to employee, I got my option, but I need to pay for it. It not free.
2, What is stock buy-back program? Does this program take care of the dilution problem?
Thanks
XyZ |
