• Research Paper on:
    OPTIONS, EXPENSING AND CONTROVERSEY

    Number of Pages: 12

     

    Summary of the research paper:

    This 12-page paper is an argumentative essay, supporting the idea that stock options should be expensed upon expiration, rather than upon awarding of the grant. Bibliography lists 9 sources.

    Name of Research Paper File: D0_MToptcom.rtf

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    Unformatted Sample Text from the Research Paper:
    to be an area of great controversy. Used for compensation during the heyday of over-paid executives during the 1980s, and then to  help line the pockets of dot-com employees during the 1990s, stock options ultimately ended up being worthless, especially in the 1990s, when the dot-coms went bust.  But it was during the Enron scandal that stock options really took a beating -- many of the employees of Enron held Enron stock options;  and when the company went bankrupt, the employees, who had thousands upon thousands of dollars of stock options, ended up with little more than worthless paper.  It was because of the Enron and other corporate scandal that questions about how to report stock options from a financial point of view keep coming  up. The concept of stock options has been so strongly in the financial news as of late, in fact, that Financial Executives CEO and President, Colleen Cunningham, indicated that expensing  stock options is the most challenging in terms of financial reporting changes for 2004 (Heffes, 2005). One reason why stock options tend  to be so controversial is because no one is really sure what their value is, making it difficult to expense in a financial report.  Basically, its the contention of this paper that stock option grants should be expensed, based on their value at date of exercise, rather than at date of grant.  There are certainly arguments that either method would be strong for a company, but its the feeling here that expensing the option at the date of exercise (in other words, 

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