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

To: Michael Allard who wrote (122086)	7/25/2002 8:46:28 AM
From: Art Bechhoefer	Respond to of 152472

If the company funded health insurance/company options analogy holds, then the company would have to set aside funds to cover health costs. Since the health costs are predictable for a reasonably large group, they would normally list this as an expense. Options might well be handled the same way, expensed as they are granted, which is the recommendation of Warren Buffett. My own view is that if options are issued with an exercise price equal to or less than the market price of the shares on the day of issue, then they should be expensed. If options are issued with an exercise price at least 10 percent higher than stock price on the day of issue, they need not be expensed because the employee would not be interested in buying them at that time. If, during a particular reporting period (e.g., a three-month period), the stock price, previously at or below the option striking price, exceeds the striking price, THEN the company would expense the options. In other words, if the option is, so to speak, in the money, it should be expensed at that time, whether or not exercised. Art