Comments on: Expensing stock options http://minibeast.local/wordpress/2004/04/14/expensing-stock-options/ Craig's musings Fri, 05 Jun 2009 21:20:23 +0000 hourly 1 By: craig http://minibeast.local/wordpress/2004/04/14/expensing-stock-options/comment-page-1/#comment-67 craig Tue, 27 Jul 2004 14:57:35 +0000 http://www.hughes-family.org/~craig/b2/2004/04/14/expensing-stock-options/#comment-67 I don't believe that socialism has anything to do with it -- the congress is not led these days by socialists. I think more likely it's your final idea which is the correct one -- allowing companies to expense stock options actually allows them to create <b>more</b> misleading earnings reports by controlling when their accounts reflect earnings in a way which has nothing to do with the performance of the company. I don’t believe that socialism has anything to do with it — the congress is not led these days by socialists. I think more likely it’s your final idea which is the correct one — allowing companies to expense stock options actually allows them to create more misleading earnings reports by controlling when their accounts reflect earnings in a way which has nothing to do with the performance of the company.

]]> By: Frinedly Libertarian http://minibeast.local/wordpress/2004/04/14/expensing-stock-options/comment-page-1/#comment-66 Frinedly Libertarian Tue, 27 Jul 2004 04:41:24 +0000 http://www.hughes-family.org/~craig/b2/2004/04/14/expensing-stock-options/#comment-66 You're right-- there is no logic to it. It is merely just another level of regulation put on companies by the government, as a form of exerting control. In this case, pseudo government control... but its part of the socialistic idea that companies are evil, and stock options are creating wealthy employees, and wealthy employees don't join unions, so we should punish this practice. At least that's the only explanation I can think of. From an economics viewpoint, it makes no sense-- options are a great way to incentivize employees. And from an accounting veiwpoint it doesn't make sense eaither because options are ALREADY expensed. Since the per-share numbers in the annual report take shares on a fully diluted basis, they report the results iwth the cost of the options conservatively expensed. (EG: its assumed that all options have already been exercised and the dilution has already happened ,even though many won't be, or won't be for up to a decade.) Its really a shame that otherwise smart companies are falling for this... I guess they figure lowering their "earnings" allows them to shuffle some money around when times are good (Because tehy really incured no expense for the options) to use when times are not so good. You’re right– there is no logic to it. It is merely just another level of regulation put on companies by the government, as a form of exerting control. In this case, pseudo government control… but its part of the socialistic idea that companies are evil, and stock options are creating wealthy employees, and wealthy employees don’t join unions, so we should punish this practice.

At least that’s the only explanation I can think of.

From an economics viewpoint, it makes no sense– options are a great way to incentivize employees.

And from an accounting veiwpoint it doesn’t make sense eaither because options are ALREADY expensed.

Since the per-share numbers in the annual report take shares on a fully diluted basis, they report the results iwth the cost of the options conservatively expensed. (EG: its assumed that all options have already been exercised and the dilution has already happened ,even though many won’t be, or won’t be for up to a decade.)

Its really a shame that otherwise smart companies are falling for this… I guess they figure lowering their “earnings” allows them to shuffle some money around when times are good (Because tehy really incured no expense for the options) to use when times are not so good.

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