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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Kevin Rose who wrote (383900)	4/2/2003 7:31:38 AM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 769670

Re: "Most options are granted using the current value of the stock. If they aren't, then typically the difference is counted as ordinary income for that tax year." >>> Only when the options are exercised... not when granted. Of course, there is one HUGE difference between grants of restricted stock and stock options grants: for stock grant compensation, it is an immediate tax deduction to the company, and the expense of the grant is counted against reported earnings. For options grants, it is an immediate tax deduction to the company, but the expense is not required to be counted against reported earnings. >>> The playing field is 'tilted' to the benefit of options grants. Options allow a company to exclude a significant part of their employee's compensation from their earnings statements when reported to the public. A 'smoke and mirrors' technique to inflate the 'E' in P/E that the public sees. Once the options are exercised, the dilution effect is the same as with grants of restricted stock. Re: "Options are proven motivators and can result in huge productivity gains, if used properly. Obscene grants to top executives are generally not as productive as spreading grants to the people who actually do work." >>> I agree completely. I would also add, however, that stock grants better align an employee's interest with the company's long-term growth than options'... and that the unequal tax treatment of stock grants and options grants should be ended.