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To: Stock Farmer who wrote (28904)	2/19/2003 2:04:16 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 74559

John, >>Stock options cannot possibly be an expense to the company unless stock itself is an expense, and, as I explained earlier, contrary to current accounting treatment, stock is not an expense except as directly to shareholders through dilution.>> Just because you tried to explain something earlier doesn't mean you were right in the first place. It will probably come as a shock to you, but according to current accounting treatment, stock based compensation IS an expense to the company!! In their Opinion 123, FASB is quite clear on this. However, lacking consensus as to how to most accurately determine the cost, the FASB allowed companies to choose between two methodologies when determining the cost: "intrinsic value" or "fair value". FASB even goes so far as to say that the "fair value" method is the preferred method as far as they are concerned. It may come as a shock to you, but your reading comprehension leaves something to be desired. If you were to reread the bold section above that you quoted, it should be clear that I was saying that stock grants ARE expensed and should NOT be. If you want to do something useful, find somewhere in the FASB morass where it contradicts my claim that a company's own stock is not accounted for as an asset to the company itself. In other words, it has no value to the company, as you would expect of something that costs virtually nothing to replace. Or, failing that, come up with a new form of logic that explains how giving up something of no value can be an expense. When a company gives up stock as compensation, it should be no different than when it gives up stock in a stock split. The only difference is the mailing addresses for the shares and who receives them. Both dilute previously existing shares in exactly the same way. Regards, Don