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

To: Boca_PETE who wrote (64552)	9/14/2003 8:06:42 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 77400

Pete, Financial statement were created to provide an accounting of how shareholder wealth HELD IN CUSTODY BY THE COMPANY is being used, This is true. You might want to observe that part of the shareholder wealth held in custody by management is authorized share capital, reserved for the issuing of stock options!!! So when you write Therefore, A COMPANY giving away stock options DOES NOT impact shareholder wealth HELD IN CUSTODY BY THE COMPANY, in fact precisely the opposite is true. In the granting of an option, share capital is transferred in trust to the employee as part-payment of wages, subject to certain conditions. And subsequent to the grant, the company no can no longer claim to hold this shareholder wealth in its custody. That makes it an expense. A wage expense, to be precise. Indeed, most accountants are agreed that stock options represent a wage expense, and the knowledgeable debate centers not on whether or not this is a legitimate expense, but the magnitude of the expense. Just about everybody arguing from a point of rational impartiality agrees that "zero" is not the right answer.