SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year
PSFT 0.00010000.0%Oct 29 5:00 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Richard Tsang who wrote (3692)11/22/1998 11:55:00 PM
From: Chuzzlewit  Read Replies (1) of 4509
 
Richard you said The FASB rule 123 requires that proforma cost of options granted being reported as footnote on the annual report so you can go to that section to find that cost element. It cannot be reported as actual cost because it is not. If reported, the IRS will add it back for corporate tax purposes anyway.

What you say is strictly true, but is nevertheless misleading. The FASB has tried on several occasions to institute some method of reporting the cost of options as an expense item, and each time it has been blocked by high-tech industries. This was not an attempt to stop the use of employee stock options -- merely an attempt to get them reported as a cost of doing business. Secondly, IRS reporting rules have nothing to do with GAAP, so it is not a question of taxable income (although the company issuing employee stock options receives a tax credit!).

My solution is quite simple. Pay employees market salaries and cash bonuses and incentives. If they wish to buy stock with the money they are certainly free to do so. This approach has the advantage of being open and aboveboard, and avoids the continuous dilution of shareholder equity implicit in the use of options.

Now ask yourself this: what does a company using employee stock options do in the case of a prolonged bear market? Answer: they reprice.

TTFN,
CTC
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News