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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Bilow who wrote (83168)	8/21/2000 6:49:47 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 132070

Carl - [...It seems that instead of trying to illustrate your point, you are only trying to obfuscate the issue...] Not at all, but I thought that you'd be able to see the paradox. If it is the non-employee twin who has arranged with the shareholders to start down a path which might well lead to huge benefits for both, there is clearly no more effect on the company accounting than when any shareholder gifts some of his shares to someone else. If it is the original employee, the company pays him during the day to eat donuts and the shareholders have given him shares to go to school at night, effectively making him a partner. This is an attempt to make explicit the difference between cash paid for an hourly job and shares granted as an incentive. If you merge the employee's day and night activities, you have to record the share grant expense to the company, IF you believe that is appropriate. However, unless someone is willing to swear under oath that they have seen both twins at the same time, there is no way to tell if the twins actually exist. From the company's POV, from the shareholders' POV, from every POV, it literally makes NO difference whether a twin exists to go to school at night, or whether it actually is the original employee who does so. If we have two possible alternatives that are indistinguishable in every way, how can they merit contrasting accounting treatments? The purpose was to try to set up an example which most clearly demonstrates my hypothesis that it is the SHAREHOLDERS who suffer the negative impact of the grants and that recording both a full stock dilution AND a company expense HAS to be double counting. However, I have no reason to believe that real world accounting may not, in fact, allow 1 + 1 to equal 1.5 or 3 in some cases. Regards, Don PS - [...In the second case, the $200K of cash compensation is reduced to compensation of 20K shares. ...] Looking back, I can see how you might have assumed this. The actual intent was to have the 20K shares from the shareholders be added to the $200K paid by the company, and not replace the cash salary.