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

To: QwikSand who wrote (51901)	9/27/2002 12:18:28 AM
From: Scott Meyer	Read Replies (1) \| Respond to of 64865

It seems that you're saying that the company has to have the stock in its possession as treasury stock (or something) from the date of the grant until all the options are either exercised or expired. Is that indeed the case? I wasn't aware that companies had to have capital tied up to back up options from day 1 of a grant (my unawareness isn't an assertion that it's true or false). Actually, I'm suggesting that things be changed such that what you say is true. Currently there's no requirement for companies to do this. I am suggesting this because it prevents dilution and it makes accounting simpler. If the company does need the stock starting on the date of the grant, I can still only see an expense recognized on the grant date as the present value of the interest on the tied-up capital. The employee has to buy the shares from them at that price when and if he exercises, so why would the whole strike price be taken as an expense? Because it is an expense. After you pay it, you have less cash than you had when you started. The fact that you're going to get it back in the future does not replace the cash that was spent.