Forum Archive Index - July 2000

["Wedde, John" <john.wedde@cit.ac.nz>]

Good question Geoff.
Off the top of my head; I don't think options feature anywhere in NZ
financial Statements of Performance or Position [Income Statement or Balance
Sheet]. Of course the interest of existing shareholders can be severely
diluted by options. IMHO options should feature somewhere in the Financial
Statements.
Cheers
John

-----Original Message-----
From: Geoff Ewert [mailto:gewert@wai.quik.co.nz]
Sent: Wednesday, 26 July 2000 09:14
To: sharechat@sharechat.co.nz
Subject: [sharechat] Options and balance sheets


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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