Why I Like Stock Options and Why I Don't Want To Expense Them?

Wandering Thoughts of a Tech Company CEO - In No Logical Order

 

 

1. A talented executive like me commands at least $10 million in salary and bonus. And I work for a token $1 salary. Right off the bat - that's a lot of money the company saved. And even if the board gave me a few million worthless options, what's wrong with that? It didn't cost the company diddly-squat.

2. We did put all this stock option expense in the footnotes last year, didn't we? It was on page 96 or something of our annual report. If people don't read our annual statements, what's the point in writing all that stuff anyway? We should just start making a short power-point presentation, stop wasting everyone's time and enhance shareholder value.

3. If the Fed can keep on printing money, why can't we print some lousy options? It doesn't cost the company a dime and it makes the "little" guy excited about the tech industry. It makes indebted-MBA students come to work for us instead of those investment banks in New York. How else would I get them to work for me?

4. I work for free (as I explained in point 1). All year round, I work damn hard to raise the stock price so that all the shareholders can make a ton of money. What's the big deal if I exercise some of my options? What about all the shareholder value I created and didn't even get paid for it?

5. With all this traffic, pollution and crazy-housing prices in California, how do I stop my best researchers and managers from leaving and moving to Nevada (nothing personal against Nevada - just giving an example)? Simple! Just issue loads of options and give them something to think about.

6. It is SOOOO hard to calculate the value of stock options. Even if I did want to expense them, I will have to hire an army of accountants to figure it out. This is just like the Sarbanes-Oxley thing - a big conspiracy by accountants to make money. We already have a hard time figuring out all those reserves - this would be just another pain in the neck.

7. I love gambling (as I said, nothing personal against Nevada) and playing the lottery, but options are way better. I have no idea how much money I am going to make at the end of the year, neither does anyone else. How's that for stakes?

 

8. APB-25, SFAS123 and now SFAS123R- all these rules and stuff. These people at FASB, SEC and all other rule-making type places need to make up their mind. First they tell us that we don't need to expense for stock options, then they decide that we can expense them the way we want it. Now, they want us to expense them and do it their way. Life's already hard enough, why make it harder? Should I be wasting all this time to figure out what they want or make money for my shareholders?

9. Leadership is all about building strong teams and motivating people. How do you build a tightly-knit team? Use stock options. Everybody in my company knows that we sink or swim together. Nothing has, or will work better. I love to hand out stock options to my employees like Halloween candy. What kind of a person would want to call them an expense and spoil the fun?

10. Last but not the least: I remember taking a class in business school where they said that the markets were efficient. People already know that we have stock options and we don't expense them. They still buy our shares - why tell them anything different?

Note: I strongly believe that stock options should be expensed. This is just me having fun, being on the other side.