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.

Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: hueyone who wrote (119773)	6/3/2002 6:35:28 PM
From: Wyätt Gwyön	Respond to of 152472

why pay first-world prices for fourth world managements? i can go to the second world (or even the Old World) and pay third world prices. rather than stay in the first world and pay prices that are out of this world -g-. Stocks Plummet on Mistrust of Corporate Management story.news.yahoo.com

To: hueyone who wrote (119773)	6/3/2002 7:01:46 PM
From: Clarksterh	Read Replies (2) \| Respond to of 152472

Ok, one more response just to make it crystal clear - Is is double counting when you negatively impact per share earnings by including the effect of outstanding options and then the government provides a positive benefit of reducing taxes via a write-off. One is a positive, the other negative. No double counting. I'll say it again, for my own personal benefit I'd be happy to see John Shannon's suggestion implemented (lots of bargins). I just think it would be pathetically misleading for most of the public. Clark

To: hueyone who wrote (119773)	6/4/2002 1:23:54 PM
From: rkral	Read Replies (3) \| Respond to of 152472

Gotta love Warren Buffett calling a spade a spade. Here are three paragraphs I transcribed from the link you provided. Author Warren Buffett today, writing about 1994: <snip> The members of Congress decided to adjudicate the fight [edit: between the FASB and Big Six accounting firms] -- who, after all, could be better equipped to evaluate accounting standards? -- and then watched as corporate CEOs and their auditors stormed the Capitol. These forces simply blew away the opposition. By an 88-9 vote, U.S. senators made a number of their largest campaign contributors ecstatic by declaring option grants to be expense-free. Darwin could have foreseen this result: It was survival of the fattest. <snip - snip> A number of senators, led by Carl Levin and John McCain, are now [edit: 2002] revisiting the subject of properly accounting for options. They believe that American businesses, large or small, can stand honest reporting, and that after Enron-Andersen, no less will do. I think it is normally unwise for Congress to meddle with accounting standards. In this case, though, Congress fathered an improper standard -- and I cheer its return to the crime scene. <snip> The edit, italics, and emphasis are mine. IMHO, Mr. Buffett is correct in implying that Congress is partly to blame for the current status of option accounting. While I too laud Senators Levin, McCain, etal. for bringing this issue to the table again, I hope they are admitting, at least privately, that Congress made a mistake last time. That would increase their resolve to get it right this time, imo. I only wish Senator Levin would have pointed out Congressional culpability in his statement to the (unknown) Committee. (But that might not help get his bill passed.) A few additional points: The issue in the 1994 vote, and Mr. Buffett's article, is the option expense related to the option grant event. It has nothing to do with any possible expense upon option exercise, e.g., the Shannon proposal. If Congress gets it right this time, companies will have to show the FASB SFAS 123 "fair value method" of evaluating an option grant in their accounting statements .. instead of the footnotes .. as recognition of compensation expense. Herein is the rub. The employee .. pays income tax on cash compensation .. should pay tax on option grant compensation .. didn't get cash as part of the grant with which to pay tax. I believe companies will be virtually forced to "grant cash", along with options, so the employee can pay income tax on the stock options. I don't wish to speculate how that would be accomplished. Ron