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User Info On This Tax Day....; entered at 2018-04-15 09:57:44
Tickerguy
Posts: 152436
Registered: 2007-06-26
@Mgpacher -- the way it works is that companies are allowed to write off the value of employee stock options as if they were cash.

Leaving aside whether they're vested and can be exercised (both of which is usually not the case at the time of issue) there's the fact that under no circumstance does this result in the ACTUAL expenditure of CASH from the firm. Options are issued against either authorized or treasury shares; in either case no actual expense not only has occurred it never will occur either.

The economic effect of issuing options as part of a compensation package is to transfer control of the firm in economic terms from existing shareholders (the public in the case of a public company) to the executives. However it in NO CASE results in the firm actually spending money, as is the case when the firm does other things that can be written off (such as investing in PPE, development, paying salaries, etc.)

It gets even more-ridiculous if the company buys back stock on the open market. That's an expense too (and thus can be written off) and if it does so for the purpose of using those shares to put into the treasury to issue to executives.....

So a firm that pays part or even all of its executive compensation in the form of options effectively gets paid by everyone in America to operate. By doing this the firm steals the foregone tax revenue on the written-off option value from everyone in the country and forcibly transfers that value to said executives.

Beelzebezos (and the others who are compensated with option packages there) literally shove a gun up the nose of everyone in the country and extract BILLIONS from you via this mechanism.

What should you do when you catch someone in the act of armed robbery again?

Last modified: 2018-04-15 10:01:44 by tickerguy

2018-04-15 09:57:44