Re: Options expensing

[Sabri Oncu <soncu@xxxxxxxxxxx>]

Nomi:

> First, I must say I'm still blushing over Yoshie's generous 
> compliments.

No need to blush. After Yoshie's post and Ahmet's correction, I checked
Doug's website and agreed with Yoshie. By the way, until I checked Doug's
site, I had not known that you are a female. Nomi is just a genderless name
to me and, by default, I assumed that you are a male. This has nothing to do
with that I am a sexist or anything, by the way. I was just being a naïve
mathematician making a probabilistic assessment. 

Just look at PEN-L: 

How many females are there who post to it?

> As it stands, corporations can deduct stock options as wages on 
> their income tax returns. They have no difficulty determining 
> stock option values for this purpose. 

Being an "anal (I heard this term many times and guess that it means
analytic)" person, I have problems with this employee stock options
valuation. They are extremely complicated animals to value, assuming that we
have the "right" model parameters at hand. So, in their valuation, anything
goes: assumptions about model parameters, assumptions about exercise dates,
as well as their mathematical properties, so forth.

The value of these options depend on what assumptions you make, which means
that this is a political issue as opposed to a "scientific" issue.

As a mathematician I met in this finance business once said:

"Finance is the most democratic discipline you can imagine. Here, theorems
are not proved. They are declared true or false through referendum."

But I agree with you: expenses must be expensed.

If only I knew how in the case of employee stock options.

Best,

Sabri