A Defense Of Stock Options
from the keep-'em dept
As the arguments over whether or not to expense stock options get more heated, Michael Malone weighs in with his opinion on why they should not be expensed. He makes some compelling arguments about how they helped build Silicon Valley, and that actually expensing high tech options fairly is nearly impossible. I still think he leaves out the most convincing argument - which is that the information is already public and it's just lazy investors and analysts who can't be bothered to look at the numbers. Actually expensing the stock options doesn't necessarily make sense, because it would just be one more made up number on the income statement that wouldn't reflect reality in any way. That said, I don't think it would "kill" Silicon Valley either. I think that most companies and analysts would learn to adjust, and someone would find some loophole to get around all of this anyway.
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Stock Options: The Standard SiliValley scam
Stock options are really a way for companies to super-exploit their employees.
1. Companies pay employees low salaries, based on the stock option excuse.
2. The fine print prevents most employees from selling their stocks when the price is high; or at the least, an environment of high peer pressure is maintained so that employees hold on to them.
3. Executives quietly sell all their holdings when the price peaks, so they can abandon the company when it goes down.
4. In effect, the employees get to pay the executive's tax bill when they had financed their homes and cars on stock options.
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Huh?
There's no fine print (other than the vesting schedule) for when you can exercise an option (at least for most people. And what peer pressure? Who even knows when I sell my stock.
3. Executives quietly sell all their holdings when the price peaks, so they can abandon the company when it goes down.
Quietly? Except for filing notice of an insider sale with the SEC. Prior to selling. Yeah.
4. In effect, the employees get to pay the executive's tax bill when they had financed their homes and cars on stock options.
I don't know where you got this. Just because Enron did it, doesn't mean everyone did it.
Clearly you know nothing about how options work. Some people actually make money on options and they are not "Wall Street Fat Cats". Sure, alot of people got suckered into working for startups for worthless options but that is always the risk you take. If it were a sure thing, they wouldn't be called "options", they be called "money".
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Re: Stock Options
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