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.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (46744)	2/12/1999 11:49:00 AM
From: Exacctnt	Read Replies (2) \| Respond to of 132070

Skeeter, The thing about stock options is that at the grant date, the grant price of the option is the market price. The option isn't a gift of stock, that is, the employee will have to pay the company in cash (in most cases) the value of the stock as of grant date at the grant price when he exercises. So how would you expense the granting of options if the company will receive cash from the employee that equals the market value of the stock at the grant date? Would you expense just the appreciation in price over the grant price? Any company that buys back stock and holds it as Treasury stock in a quantity that comes close to the number of outstanding option shares doesn't have an expense because theoretically they will be paid back whatever they outlayed in buybacks when the employee exercises the option. Except that there may be a cost associated with holding the stock, but that may be offset by tax credits given to the company. I know, I know, that this isn't happening in the current environment. However, just how would you determine the amount that would be expensed without factoring in the number of shares being held as Treasury stock? Just expensing options isn't as easy as it sounds. Regards, Bob