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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: JohnM who wrote (45927)	9/21/2002 4:31:16 PM
From: carranza2	Read Replies (1) \| Respond to of 281500

To simply say that Cassidy impugns stock options is a bit too easy, John. His arguments deserve better than that. As I read the piece, the reasons why stock options became so prevalent was the manner in which they were accounted for. They are still legally not considered an expense to the corporation, though they clearly do dilute earnings and stockholder value. Cassidy documents Joe Lieberman's and Diane Feinstein's support for the funky way in which options are tallied. He also suggests that Clinton's zeal to bring corporate America to heel is also responsible. He limited the tax deductibility of corporate salaries to the first million dollars, thereby sending the cost-cutters on a search for a vehicle to get cash to the CEOs. When they noticed the favorable treatment that options get on the accounting books--they artificially inflate earnings because they are not counted as exspenses--they latched onto options. Prior to that time, options were not a significant element of corporate compensation. The bull market did the rest. Naturally, once the corporate bigwigs got the options and saw how they could benefit from them in a manner that did not make the books look bad, they adopted them as if they were prodigal children. The Dems are responsible for this. Stupid "feel good" legislation leading to horrible results. We've seen a few progressive corporations expense options, as well they should. But they are still a small minority. It's a step that needs to be taken. The limits on deductibility of salaries to the first million also needs to be axed out of the Tax Code, but what self-respecting politician is going to do that?