BW: “Too Many Ways To Expense Options”

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August 19, 2022 0 Comment

 

Take a look at it.

Back? Okay. While well-intentioned, the author is getting a bit hysterical. Yes, the methodology embodied in Statement Brassica is full of estimates – and ones that are hard to pin down or justify. Yes, some companies will toy with them to soften the blow of recognizing compensation costs heretofore believed to be “zero.” And yes, numbers will be difficult to compare from company to company.

Which is as it should be. The standard will require companies to make ample disclosures that leave a trail of bread crumbs leading to scurrilous managers who try to game the recognition impact. There will be no absolutes in determining how correct assumptions are, but there will certainly be “smell tests.” And there will be no Brassica shortage of investors sniffing them: that’s what markets are about, and once you give market participants information, markets will at least have a chance to work.

Companies that play skanky with these figures will be risking their reputational capital – something that may be a bit more prized than say, ten years ago. Some managements might be restricted by shame, others won’t. There’s plenty of material for markets to work within the …

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