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

To: Lizzie Tudor who wrote (64085)	5/16/2003 2:26:21 PM
From: GVTucker	Read Replies (2) \| Respond to of 77400

Lizzie, RE: even if they aren't "granted" yet? You set the 70mm shares aside, and when you gift them there is the actual expense right, but there is no vesting period per se? This would work for startups because any expense which has to factor in a risk premium won't work for startups. But there is no risk premium in these expenses right? You've mostly got it right. When the shares are granted, the share grant is expensed. There doesn't have to be a vesting period, no, but I would think that you would want one. The whole objective is to keep key employees in the fold, and if you have a vesting period, they have to stay to get the shares. One caveat might be in the tax treatment. I don't think the employee gets taxed until the shares vest, but I'm not sure. If the tax liability for the employee occurs when the shares are granted, it might hurt the employee because they'd owe cash taxes but didn't get cash to pay the taxes. Again, I'm not sure about this one, though, although I imagine tax accountants on the thread could tell us.