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[sharechat] Options and balance sheets

From:	"Geoff Ewert" <gewert@wai.quik.co.nz>
Date:	Wed, 26 Jul 2000 09:14:05 +1200

Hi chatters.

(on a quiet morn)

A curious aspect of "executive share options" is that in many countries they do not end up as a cost on co. balance sheets!

[leaving out options from the balance sheet means US cos.issuing them have understated profits by half](Economist 07/08/99)

Warren Buffet had this to say about the practice"Accounting principles offer management a choice :pay employees one way and count the cost,or pay them in another form and ignore the cost.If options aren`t a form of compensation what are they?If compensation isn`t an expense,what is it?And,if expenses shouldn`t go into the calculation of earnings,where in the world should they go?"

[Berkshire Hathaway annual report 1998]

What practice in NZ???

Regards G

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