This is already the case. It's called capital gains.
When the optionee exercises, he/she incurs a tax liability for the difference between their grant or stike price and the market price at time of exercise.
You get it.
Yes, the cracks will be impossible to ignore. It is only a matter of who's left holding the bag when that day comes. And, in this matter, it's coming soon.
June 15 officially, but the smart money is already moving.
Greetings. I am new here, but not at all new to the subject at hand. Having read many of your posts concerning employee stock option (ESO) expensing, I can only say most of you are at least partially wrong in how you interpret the impact and significance of this looming change. There are many companies out there, whose truly pathetic operating performance will be laid bare.
In particular, I am amazed at how some of you think options grants have no impact on the books. They have an enormous impact. In fact, I could rattle off several companies that, without their ESOs, would not even be cash-flow positive. The combination of exercise cash (paid by optionees) and tax deduction (equal to the delta between exercise and market prices at time of exercise) is the only way many companies could even stay in business. Yahoo is one that we all know.
Sounds like a good trick, but is this the kind of company you want to invest in? Of course not. If a company, years after going public, still cannot generate a postive operating cash flow without selling more and more dillutive stock to boardmembers, executives and employees -- at below market value -- who then promptly dump these dillutive shares on sharholders, perhaps the company shouldn't be in business.
There is no doubt in my mind that, as this issue gains broader understanding, the market at large will find it has grossly misallocated capital, and there will be an efficient reallocation.
June 15 is the effective date, but I doubt big money will wait for everyone to gain understanding. I expect they are already "reallocatiing" and that may even be part of the markets decline of the last few weeks.
Some big-name companies we all know are going to be punished severely. And they deserve it for the heretofore legal ponzi scheme they've been perpetrating. If any of you are familiar with Broadcom (BRCM), they are the worst ESO-abuser our research has uncovered so far. It would not surpise me to see their stock in single digits within nine months.
I welcome comments and questions.
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This is already the case. It's called capital gains. When the optionee exercises, he/she incurs a tax liability for the difference between their grant or stike price and the market price at time of exercise.
You get it. Yes, the cracks will be impossible to ignore. It is only a matter of who's left holding the bag when that day comes. And, in this matter, it's coming soon. June 15 officially, but the smart money is already moving.
Greetings. I am new here, but not at all new to the subject at hand. Having read many of your posts concerning employee stock option (ESO) expensing, I can only say most of you are at least partially wrong in how you interpret the impact and significance of this looming change. There are many companies out there, whose truly pathetic operating performance will be laid bare. In particular, I am amazed at how some of you think options grants have no impact on the books. They have an enormous impact. In fact, I could rattle off several companies that, without their ESOs, would not even be cash-flow positive. The combination of exercise cash (paid by optionees) and tax deduction (equal to the delta between exercise and market prices at time of exercise) is the only way many companies could even stay in business. Yahoo is one that we all know. Sounds like a good trick, but is this the kind of company you want to invest in? Of course not. If a company, years after going public, still cannot generate a postive operating cash flow without selling more and more dillutive stock to boardmembers, executives and employees -- at below market value -- who then promptly dump these dillutive shares on sharholders, perhaps the company shouldn't be in business. There is no doubt in my mind that, as this issue gains broader understanding, the market at large will find it has grossly misallocated capital, and there will be an efficient reallocation. June 15 is the effective date, but I doubt big money will wait for everyone to gain understanding. I expect they are already "reallocatiing" and that may even be part of the markets decline of the last few weeks. Some big-name companies we all know are going to be punished severely. And they deserve it for the heretofore legal ponzi scheme they've been perpetrating. If any of you are familiar with Broadcom (BRCM), they are the worst ESO-abuser our research has uncovered so far. It would not surpise me to see their stock in single digits within nine months. I welcome comments and questions.