[Starwind]

The particularly thorny question now is how stock options should be valued, with problems including how to measure such costs prior to the options being exercised by the recipient.

This has always been my objection to expensing options. There are also several different tax treatments for both the option holder and company depending on ISO's vs NQ's which can't be fully predicted until exercise. The AMT get's it's fingers in here as well.

Meanwhile, the cost to the company comes when the options get exercised, because it is selling its shares for less than what it would get if it were selling them on the open market.

Not always...the smart strategy is to exercise as close to the grant price as possible to minimize recognizeable gains. It also depends on vesting and whether the Co's stock price has risen. Options are also used in lieu of financial compensation, so the salary or performance bonuses an employee waived benefits the company but as this was a hiring negotiation point, it won't have an accounting journal entry.

[Starwind]

Fyi...

[Doctor Stochastic]

I can get you a pretty good value for the variance of the option, but knowing that the expenses will be between, $50,000 and $4,777,325 next year isn't very helpful.

[Moonman62]

In the latest call against expensing stock options, the International Employee Stock Options Coalition, an industry group, issued a statement Wednesday to applaud U.S. Rep. Dick Gephardt's support for a bill aimed at getting the Securities and Exchange Commission to study the stock option issue for three years, thus blocking the FASB's efforts to change the rules in the near future.

Gephardt, who made the announcement in a Tuesday speech in Silicon Valley, became the first among the nine Democratic presidential candidates to back the bill and join the fight with high-tech executives against expensing stock options.

It's a sad day when we have to rely on the RATS to be on the right side of a business issue.

[Steven W.]

Not always...the smart strategy is to exercise as close to the grant price as possible to minimize recognizeable gains. It also depends on vesting and whether the Co's stock price has risen. Options are also used in lieu of financial compensation, so the salary or performance bonuses an employee waived benefits the company but as this was a hiring negotiation point, it won't have an accounting journal entry.

Good points except you missed one - stock options are already accounted for in the most important way - by diluting the share count. If stupid investors would just merely start focusing on net income per diluted share as the bottom line they wouldn't find such simplicities to seem so complicated.