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5.5.2004
Stock Options and the Creative Classes
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As this WebJournal has argued before, the movement to force companies to treat stock option grants as compensation expense is not really a debate over good accounting. It is a political struggle triggered by the increasing importance of the products of the intellect as a form of corporate capital, and by resistance to this phenomenon from conventional financial capitalists and such other apostles of stasis as bureaucrats and public employee unions.
In support of this contention that it is not about good accounting, examine an article on Google from the May 3, 2004, issue of Barron's (subscription required). The article notes that Google's practice of treating option grants as a compensation expense "understates" its actual profitability. Columnist Holman Jenkins picks this up in today's WSJ (still subscription), and adds "analysts everywhere simply undid the deduction to get a more accurate picture of Google's underlying profitability . . . . If this is not dispositive of the practical silliness of the whole debate on expensing, we don't know what could be."
posted by James DeLong : 5/5/2004 11:42:17 AM
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