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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Math Junkie who wrote (2453)	4/25/2003 8:27:25 AM
From: Boca_PETE	Respond to of 10065

Richard Palm: re:("IIRC, the FASB said "Options have value...what they conveniently forget to mention is") Both confuse the interested public investor by failing to distinguish between traded options which have value by virtue of their marketability, and, employee stock options which are not transferrable by their terms and therefore have no value because they are not marketable. Value to employee stock options is zero at date of grant because the option exercise price must equal the market value of the company stock at date of grant. Value to employee stock options only arises if the company stock price rises. That value can only be captured by the employee by paying the option price to the company in exchange of the company stock. But to realize the current market value of the stock, the employee must then sell it it to a current or future company shareholder in exchange for cash (at transaction that has nothing to do with the company). Herein appears the crux of who actually pays the stock option expense. Herein conspicuous by its' absence is the company which has nothing to do with paying the stock option expense. Add yourself to the list of those who see the light on this issue. I share your disgust with the politicizing of the language of business - accounting. I am very disappointed in the profession. But I realize it took an act of congress to stop mandatory expensing to stock options when FASB Standard No. 123 became a rule in the early 1990's. On the stock option issue, the FASB reminds me of this crazy robin that shows up at our house every spring. It constantly dive-bombs into our windows every morning and evening. The poor bird never learns no matter how painful it is. It must be painful because it leaves white droppings all over our windows, deck and surrounding shrubs. I believe FASB has been grossly misled by its' academic technical research advisors on the issue of stock options. P