Stock option expensing required next year

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"Taking a big bite out of earnings"

Expensing options does no such thing; it only changes the numbers in the financial reports made available to stockholders and the general public. The only change to real earnings is the cost of the extra accounting.

Will the new rules more accurately reflect the true financial state of corporations? time will tell. At any rate, corporations are still free to offer stock options as long as its OK with the existing stockholders who are, after all, the owners; and investors can interpret this new number however they want.

What companies will not be able to do, however, is to hide these sorts of transactions from the public, pretend that they are free money, or tell investors a different story than the one they tell their employees, which is what I suspect tech managers are really upset about.

Posted by: John L. Ries   Posted on: 12/16/04 You are currently: a Guest | Members login | Terms of Use

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