They are also realizing that options, though inexpensive in the short term, cost dearly over the long term. Re-pricing shares essentially erases underwater options and replaces them with an equal number of new ones at a lower price. Supplementing options is another possibility, and no less a tech titan than Microsoft has resorted to the tactic. In April, Microsoft granted a total of 70 million options to its 34,000 employees. But Wall Street hates both strategies because they dilute shares available on the open market.
Some people win and some people lose.
I know we're trying to create opportunities for wealth, but we need some consistency if we want to play the game. Some institutional investors dislike stock options so much that they are calling for a change in how they are recorded. Today, stock options are considered a capital transaction, appearing on the balance sheet as a sale of stock. Anti-options groups argue that they should be considered an expense, no different from salaries and bonuses. But stock options face more problems than cantankerous investors.