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

To: rkral who wrote (65071)	11/17/2003 7:56:36 AM
From: RetiredNow	Read Replies (1) \| Respond to of 77400

It all depends on the future price of the stock. Sure, if X # of grants and an equal # of options were given out, the stock grants can end up costing the company more than options if the stock price never goes up and the options expire worthless or the stock price doesn't more than double before the options expire worthless. But that's not my point. Stock grants have to be expensed under GAAP. Therefore, shareholders know immediately and with certainty how much employees are getting paid vs how much productivity the company is getting out of them. Therefore, stock grants (as well as cash incentives) are given out much more sparingly than options. Since options costs to the company are murky in most people's minds, companies have abused them, putting shareholders at a disadvantage. This is why shareholders should prefer straightforward means of compensation over shady techniques like options. At the end of the day, if everyone can quantify the costs and it is plainly expensed on the income statement, then shareholders have confidence that the services of employees are valued properly. I'd argue that with options, many employees are simply overpaid for what they give back to the company and to shareholders.