Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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.

Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Joseph Beltran who wrote (61431)	5/3/2002 3:31:12 PM
From: Casaubon	Read Replies (2) \| Respond to of 99280

that's just ignorant. Those options are part of a remuneration package. If the employees were not compensated with options, they would have been compensated with higher pay packages, thus diminishing the earnings of the company. Otherwise, the employees would have gone elsewhere and the company would have no R&D and then eventually go BK due to market competition stealing market share. I believe the options grants are tax deductible for the issuing company making it a win-win for employee and company. The share holder must recognize the cost as a dilution to earning. Shareholders must understand this cost to properly assess the value of a company. A soon as options are granted, they must be assumed as fully dilutive to earnings. I also believe a cost to the company should be booked to represent the time value premium of the options granted. This is what has been ignored by current accounting practices; nothing more, IMO.

To: Joseph Beltran who wrote (61431)	5/3/2002 3:48:09 PM
From: Math Junkie	Read Replies (1) \| Respond to of 99280

So it sounds like the effect is the same as if, at the time of exercise, the company issued new shares of stock at $45, and paid $44 of that to the employee. Of course, the tax situation would be different. It seems like it would be easy enough to determine the expense to be charged to the books at the time of exercise, but how would you determine the charge at the time of the grant, since the exercise price is still unknown? It seems like whatever number people come up with is going to be largely fictitious. I also have to wonder what would be accomplished. As long as the same rules apply to all companies, what's the point? Are people just looking for a way to get companies to issue fewer options?