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To: Don Lloyd who wrote (64627)	9/15/2003 11:30:58 PM
From: hueyone	Respond to of 77397

the fact that expensing stock grants happens to be the current practice The FASB has believed for decades that all stock based compensation should be expensed on the income statement, including stock options. Stock options slipped through the cracks in the early years by virtue of the difficulty of valuing them at grant. In later years this loophole managed to continue to exist due to pressure from Washington politicians receiving campaign contributions from stock options beneficiaries. #reply-17249383 Accounting-rule writers grappled with the issue at least as far back as 1972. Not only weren't stock options widely used back then, but the challenge of calculating their cost was daunting. So officials decided that options needn't be treated as an expense. By the early 1990s, there were sophisticated new methods available for projecting the long-term value of stock-option grants

To: Don Lloyd who wrote (64627)	9/16/2003 6:48:43 AM
From: rkral	Respond to of 77397

OT ... Don, re "arguments that relate to the expensing of options apply equally well to the expensing of stock." I concur. As you said earlier, the grant of non-vested stock is just an option grant with an exercise price of $0. re "the fact that expensing stock grants happens to be the current practice doesn't make it any more valid or correct." You've said a stock grant decreases the value of stock held by existing shareholders. And you've said a stock grant increases the income of grantees. It's a shell game. We start out with $X of assets under the stockholder's shell, and $0 under the shells of the company and employee. Then we see the slide, slide, slide of the shells by the shuffler of assets. And at the end, $X is under the employee's shell and $0 is under the stockholder's shell. But just because there is also $0 under the company shell, doesn't mean the company wasn't involved in the transfer of assets. The assets moved from under the shell of the stockholder, to that of the company, and then to the shell of the employee. You just weren't physically or mentally quick enough to see it happen. The stock grant is a give and take. Or more accurately, a take and give. The company takes $X of assets from stockholders and gives $X of assets to employees. The company is the focal point of the asset transfer. It is the grantor of the options. To say that an option grant or stock grant is not an expense of the company, .. is ludicrous IMO. Regards, Ron