Employee Stock Options

Paper Summary:

This paper discusses the practice of issuing employee stock options as a benefit. The paper goes into detail about how a stock is exercised and what kind of tax benefits result. The paper also details past practices of accounting employee stock options and how these practices have worked. Also included in the paper, is information on present legislation and how that works or doesn't work to better the situation. Furthermore, the paper discusses the controversy brewing over such changes being made and explores the different viewpoints on the matter.

Introduction
Definition
Methods and Models
Controversy of Stock Options
Baseline: Americans with Stock Options
Recent Legislation
Economic Impact
High Tech Industry
The Cisco Company
Why Employees with Stock Options Should Worry About Valuation

From the Paper:

"Within the last ten years a demand for changing how Employee Stock Options (also referred to as ESOs) are accounted for within an organization's financial sheets has been underway. Such a proposal for change has received much commentary from not only the financial community and corporate America but also key members of Congress, union leaders and the public. Such a response results from the uncertainty that such change will benefit businesses and economic growth in this country. It is feared that such change will have the opposite effect and cause America to lose its competitive edge in the global market. Still this has not stopped the fuel of the fire as the Financial Accounting Standards Board (also referred to as FASB) has struggled for an answer to such a dilemma."

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