Board-Ansicht
Mix-Ansicht- Zweites"Wochenendgespräch" - R.Deutsch, 13.01.2001, 00:05
- Dein Grossartiger Beitrag trifft in mein Herz, - jagg, 13.01.2001, 00:19
- Re: Zweites"Wochenendgespräch" - BossCube, 13.01.2001, 00:19
- Re: Zweites"Wochenendgespräch" - R.Deutsch, 13.01.2001, 11:24
- Warum immer gegen den Staat? - Kleinanleger, 13.01.2001, 10:40
- Re: Danke lieber Kleinanleger - R.Deutsch, 13.01.2001, 11:35
- Re: Warum immer gegen den Staat? - Baldur der Ketzer, 13.01.2001, 19:24
- Re: Baldur: Wie recht du hast!! (sagt ein Widder) - Josef, 13.01.2001, 20:21
- Re: Warum immer gegen den Staat? - nereus, 13.01.2001, 20:26
- Privatverantwortung! keine Privatisierung der Macht! - Kleinanleger, 14.01.2001, 11:27
- Re: Zweites"Wochenendgespräch" - Christliche Motivation: - Diogenes, 13.01.2001, 13:21
- Gata Abbonement - R.Deutsch, 13.01.2001, 13:26
- Zu Microsoft und Cisco: www.billparish.com oT. - BossCube, 13.01.2001, 15:30
Gata Abbonement
Hier mal ein Beispiel, welche Art Information man von Gata fĂĽr die 90 Dollar in die mailbox bekommt. (es kommt nur ein summary, den Rest muĂź man mit Passwort von der Seite holen) Straightforward, clearcut, no nonsense information.
Dr. Neville Bennett
n.bennett@hist.canterbury.ac.nz
January 11, 2001
Stock Options
A secretary with seven years service at Microsoft is a multi-millionaire, thanks to that company's
generous employee stock option scheme.
Some 65,000 of Microsoft's former and current employees are millionaires because of this form of
compensation. Stockholders have done very badly in comparison. Their dividends are derisory, and
their share's value has fallen in the last year from US$119 to $43.
Indeed new evidence has come to light which shows that Microsoft, and several other market
leaders, would never have made a profit at all if employee stock options were counted as a cost on
the balance sheet.
Research by London consulting firm Smithers and Co. reveals that of the largest 100 US companies,
11 would have no net corporate earnings if stock options were an employee cost. These companies
include Microsoft, Cisco, Dell, Intel, Texas Instruments, Hewlett-Packard, Bristol-Myars Squibb, Eli
Lilley, Monsanto, and Time-Warner.
Another 13 companies would have seen their profit halved if stock options were regarded as a cost:
these include such well-known corporates Chase Manhattan, Coca Cola. Gillette, Merrill Lynch,
Sun, and Walt Disney.
While the data is somewhat dated (1996-7) the general point remains broadly valid as the FASB
(Federal Accounting Standards Board) regulatory authority has not seriously modified its policy on
the handling of stock options.
An immediate implication of this accounting practice is to make price/earning ratios look much
better than they would be under different regimes. P/E's benefit when corporations are able to
ignore what can be a substantial cost.
Smithey and Co. are indeed deeply concerned by the real cost of stock options, and they use the
phrase"mortgaging the future" to draw attention to its scale and potential risk.
They list 14 major corporates whose option allocations are greater than 25% of their shares
outstanding; including Microsoft and other"new economy" leaders, but also almost all of the big
names in finance.
This practice seems unsustainable. For example Lehman Brothers in 1996-7 allegedly granted share
options to the value of 10.08% of its weighted average shares outstanding on a fully diluted basis.
The percentage for some other companies was Bankers Trust (8.8%), Merrill Lynch (6.8%), and
Dell (5.7%).
An evaluation of American stock option practice is somewhat problematic as the economics
profession, if judged by research literature, regards stock options as beneficial for they provide
incentives to employees to improve their firms performance.
A paper by B. Hall in the Quarterly Journal of Economics is typical: Hall finds a strong relationship
between a firms performance and the level of CEO compensation, and"This relationship is
generated almost entirely by changes in the value of CEO holdings of stock and stock options".
So, for Hall, stock and stock options seem to be not only effective incentives but are also better than
salary. I searched a database of economic literature published in 2000, and found almost no anxiety
about stock options. The 350 academic studies were overwhelmingly concerned about the problem of
setting a fair price. Taxation is also an issue.
Some writers praised boards which had reset exercise prices after market prices had gone
underwater.
In short, economist did not seem at all concerned about non-employee shareholders' dividends.
An exception was a paper by Fenn and Liang for the Federal Reserve that indicated how
managements which owned stock options, used their influence to encourage their boards to use
profits to buy back shares rather than increase dividends.
Managers with stock options consider that share prices respond better to share repurchases than
increased dividend payments.
It must be concluded that the large profits being generated by the most innovative firms are not
being passed on to their stockholders, as was the case in"old capitalism". Indeed, one prominent
feature of the new economy is that profits are often passed primarily to employee shareholders.
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