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

To: Skeeter Bug who wrote (46771)	2/12/1999 3:16:00 PM
From: Exacctnt	Read Replies (1) \| Respond to of 132070

Skeeter, <<the difference between the strike and the price at sale. it is compensation and should be issued when the compensation is realized. that would be a start.>> To the employee, any gain on the option is taxable when exercised. For the company however, the issuance of stock impacts them negatively only if they have to buy on the open market shares of stock to cover the issuance to the employee. Also, a company that has increased its stock price let's say 10 fold in 10 years would undoubtedly have huge expenses to its earnings strictly due to employee options and not its operations( Microsoft for instance). Such a company with outstanding price appreciation in effect would be hammered with non-operating charges that would swing wildly with the timing of option exercises. On the other hand, such a company will find itself pyramiding its future liabilities if they have not consistently bought back shares limiting what is needed to cover outstanding options. The whole option scheme is a can of worms. Saying all gains should be an expense to the company is just as extreme as having no company option related expense. Regards, Bob The