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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Charles Tutt who wrote (170396)	7/24/2002 2:35:17 PM
From: mepci	Read Replies (3) \| Respond to of 176387

Charles: The difference is that GM pays an insurance premium and company doesn't shell out cash at the time of issuance of stock options. But this is where the Fonzi scheme lies. If you are granting an option to employees, you should set aside the number of shares the grantee might take at a future date. By not doing so you are misleading the shareholders and taking a huge risk if the stock goes up disproportionate to book value and current market value (which is normally is used in pricing options). The cost of option grant may need an insurance actuary to calculate. warren brought an interesting idea. corporations should take an insurance on the cost of option grants and limit their costs to the insurance premium. that premium should be deducted from earnings as cost of option grants, which is an employee benefit. value given need not be an expense. But option grant has a risk factor, which has a cost associated with it. All costs need to be expensed in the books.