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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: CYBERKEN who wrote (50674)7/24/2002 6:36:51 PM
From: Charles Tutt  Read Replies (5) | Respond to of 64865
 
Why not just treat them as what they are? On the day they're granted, the employee has income of their fair value and the employer has a compensation expense of that same amount. The employer also enters into its investment portfolio a short call position, the value/exposure of which is periodically marked to market.

JMHO.

Charles Tutt (SM)



To: CYBERKEN who wrote (50674)7/25/2002 7:19:48 AM
From: JDN  Respond to of 64865
 
Dear C: Charles has answered you correctly, however the bug in the details is HOW do you VALUE options at date of issue. Goes right back to ASSUMPTIONS and that is what has gotten us all in trouble to begin with. JDN
PS: To be tax free among other things options must be of 5 year duration, usually exercisable 20% a year.


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