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Education, Jobs & Professions / Employer-Granted Stock Options


Subject:  Re: Is it true? Date:  3/3/2006  3:45 PM
Author:  markr33 Number:  2033 of 2049

Well, it probably has to do with FASB 123(?) which changed how stock based compensation is reported....which affects a company's bottom line, so it has become unpopular.

Also affected were Employee Stock Purchase Plans....which used to offer a 15% discount of the lower of the start or end of the purchase period as the purchase price. Which was great incentive for employees to acquire stock...but now that it is considered compensation....they only offer it with a much smaller discount at use the price at the end of the purchase period....and the discount is to offset handling/commission fees to get the stock (otherwise it would be considered compensation...)

I wasn't aware that ESPP rules changed in FASB 123. As far as I know, the 15% discount was always considered to be compensation income as of the date the stock was sold. Last year, I sold 1 share of ESPP stock and incurred a gain of $0.67 which was included in my W-2 as compensation income :-) Also, the 15% discount is still in place, and the start of period or end of period purchase price is also still in place.
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