And what’s the difference between restricted stock and stock options?
Bill Gates of Microsoft Corp. once said in an MSNBC interview that he regretted ever offering stock options to employees as part of the software giant’s compensation package.
He said “Although such universal stock options were credited with
creating the incentive that fueled much of the technology revolution of the 1990s in Silicon Valley and elsewhere, they also were
criticized because of the way they allowed companies to compensate employees
without fully accounting for the expense.
“Amid growing criticism over the accounting rules, Microsoft switched to a program of offering stock grants to employees that
vest over time and are accounted for as an expense.”
As with many things ‘Microsoft,’ the idea has trickled down to smaller companies. Now, restricted stock is the hot new
alternative for equity compensation. But what are the key differences
between restricted stock and stock options? What are some of the trade-offs,
tax alternatives, risks and accounting issues?
Bruce Brumberg, Editor-in-Chief of
myStockOptions.com, delivers many of these answers in a presentation he has given
to diverse audiences this year as FAS 123R accounting has refocused many
companies on stock option alternatives.
If you're tracking stock options or restricted stock, you'll want to review this presentation.