Note from the author: I'm not a student, so please feel guilt-free when providing me with guidance!
I read a passage in my readings of financial and accounting topics. Here's the passage about MSFT and their use of stock options as compensation:
"There is also the issue of tax benefits from stock options. For MSFT, such tax benefits derived from option-related tax deductions and received in the form of reductions in tax payments totaled billions in
2003."
Aren't *ALL* forms of compensation - from defined benefits plan to salaries, etc. - paid as pre-tax expense (i.e. it's tax-deductible)? If so, then why single out stock options as being tax favorable?
Also, why don't publicly traded companies pay much more of its employees' salaries in the form of stock options - since this would do more to maximize the Cash Flow from Operations and minimize cash flow from financing (which is less correllated with the stock price)?