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Author: markr33 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2049  
Subject: Is it true? Date: 3/2/2006 7:32 PM
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From the traffic on this board, it is apparently true that many companies have ceased using stock options to motivate/compensate their employees.
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Author: HitDaPin Old School Fool CAPS All Star Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2031 of 2049
Subject: Re: Is it true? Date: 3/2/2006 7:47 PM
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For non-executive employees, that may well be true.

Companies which do give stock options are not looked upon favorably, at least in this section of Fooldom. That might also explain the dry wasteland that is this board.

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Author: TheDreamer Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2032 of 2049
Subject: Re: Is it true? Date: 3/3/2006 8:48 AM
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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...)

Though I know that around this time, the company did come out with a new stock option plan...which they said would be restricted for use as employee incentatives. Though I haven't heard anything further, though it is hard learning things since I was part of the 3rd of the company to get the axe because it wants to acheive an 18% profit growth every year...under the assumption that revenues will remain flat.

At least the my remaining unexercised/vested employee stock options ceased to be underwater and I was able to exercise them before their change in expiration due to job termination.

Now I'm watching/waiting for a good time to sell the shares that I had acquired through ESPP....some of which I have to wait until next year for the long term cap gains rate.... Which'll hopefully be long enough for there to be a gain to benefit from holding on it.

The Dreamer.

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Author: markr33 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2033 of 2049
Subject: Re: Is it true? Date: 3/3/2006 3:45 PM
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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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Author: TheDreamer Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2034 of 2049
Subject: Re: Is it true? Date: 3/5/2006 3:24 PM
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Yes...the 15% discount is taxed as compensation for us....

But, now the company has to account for it as such as well....

The Dreamer.

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