Tuesday, July 20, 2004

Geeks:1, Pencil Necks:0

Hey, congress actually gets something right: House Votes to Block Stock Option Mandate
 
Here's why:
1. The only result of this rule would be to stop stock options to rank-and-file workers.  Corporations have already demonstrated that they are willing to put up with expenses connected to pay at the upper ranks, so all this would do would be to take away a benefit that the lower ranks actually enjoy.
 
2. Options are the life-blood of small companies, especially in tech.  Having to expense options would make the statement of companies about to go public look horrendous (what do you think Google's books would look like if they had to expense their options?).
 
3. The data is already out there.  Anyone who is interested can calculate the result of options on the bottom line, assuming they knew how to do the expensing, which brings me to the next point. 
 
4. How are options valued and expensed against earnings?  The options I received when I started my present job are WAY under water, with the good chance they will remain worthless until the time they expire.  If my options expire worthless, what expense did my company incur and how did it effect its bottom line?
As the article states, this overturn actually has bipartisan support in Congress, most likely due to the left-wing techies in NoCal, who are liberal as long as they can keep stuffing their own pockets.

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