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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year -- Ignore unavailable to you. Want to Upgrade?

To: George L. Smith who wrote (2181)	9/8/1998 10:41:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 4509

George, you asked Why not just take an expense of the difference between the strike price and the market price on the date of the grant? By this I take it that you mean when the options are exercisable, I think your method would not capture the expense incurred at the time it was incurred. For example, I could be hired today and granted options that vest (i.e., are exercisable) five years from now. Also, those options would presumably be in payment for work I was doing now. If you expensed it five years from now you would lose the possibility of matching expenses to revenues and so would end up distorting the income statement by deferring expenses to a later date. I think your method also ignores the time premium inherent in options. I should point out, however, that I am sipping my second scotch of the evening, and so anything I say should be subject to considerable scrutiny. TTFN, CTC