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 : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Thomas Duttera who wrote (174866)	5/14/2005 12:39:42 PM
From: rkral	Read Replies (1) \| Respond to of 176387

Thomas, re "So if the strike was $30 and the employee exercised an option at $40, Dell is only out $10. Right?" Right, and it's actually even better than that. When they're non-tax-qualified stock options (NQSO), as most are, the employee pays taxes on that $10. As a result, the company may claim the $10 as a deductible expense for their tax accounting. At a federal statutory corporate tax rate of 35%, the company is then only out $6.50. I guess state tax and FICA taxes are part of it too, but I just assume they approximately cancel each other out. re "since diluted shares includes unexercised options, doesn't the ongoing calculations of earning per share really include the impact of stock options?" Is this comment relative to expensing options or the repurchase of common stock to offset dilution? Ron