Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: bofp who wrote (64064)	5/15/2003 2:05:48 PM
From: hueyone	Respond to of 77400

Employees come and go and many issued options do not vest. I believe that the options expensing proposal by FASB 10 years ago did indeed allow for adjustments to zero expense for options that do not vest, but it did not allow for subsequent changes in expensing due to changes in stock prices. 7. The initial measurement of compensation (both the asset and stockholders' equity item) that was based on the value of the award at grant date would later be adjusted, if necessary, to reflect the outcome of any performance conditions or service-related factors. Those subsequent adjustments could result in zero cumulative compensation expense being recognized if the options ultimately are forfeited or not earned. However, compensation cost would not be adjusted for changes in the stock price after the grant date. nysscpa.org Regards, Huey

To: bofp who wrote (64064)	5/15/2003 3:47:01 PM
From: Lizzie Tudor	Respond to of 77400

Frankly, I believe the best solution is to force companies to issue restricted stock grants rather than options. Stock grants are easily valued and transparent to shareholders. Somebody suggested this on another thread, and the way they explained it, it sounded like this approach would satisfy everybody. Apparenly a different class of stock is created which is not tradeable until a specific time period. I didn't know this was even possible, can anyone comment on this? So in Cisco's case they would create a class of stock and issue 70mm shares for intent to grant to employees. This stock would be issued say, today but only tradeable in 1-4 years. Then the actual stock could be gifted to employees that hang around. The only issue is whether employees would have to pay something for the stock vs. an outright gift. Right now if I were Chambers I would make this set of stock an outright gift because the stock price is probably around 11$. If Cisco stock ever reaches 50$ again then employees should have to pay the strike price if they want it, that way they get the gain only. Does this sound correct from an execution perspective? This approach would satisfy me because it would provide for the true cost of options which is dilution, imo.