Key West's ESOS issue

Saw this article posted by the Edge Weekly on Key West Global. ( KEYWEST )

Corporate: Key West takes Esos hit
By Siow Chen Ming

Here are some points from the article..

• Mesdaq-listed Key West Global Telecommunications Bhd (KWGT) is probably the first company on Bursa Malaysia to have reported a loss from expensing its employees' share options. The company said it had expensed a sum of RM396,000 on share options in the first financial quarter ended April 30, 2006, causing a pre-tax loss of RM516,000 during the period, on a turnover of RM45.32 million. During the previous corresponding quarter, pre-tax profit amounted to RM770,000 on a turnover of RM25.77 million.

And last but not least, the writer mentioned the following:

• With share options becoming an "expense", this would be a reminder to companies to plan their Esos properly so that their future earnings performance are not affected. This is particularly so for companies that have high staff counts but with small profits or thin profit margins.

Here's the issue for me.

ESOS is to reward the employees.

I have no problem with it.

Expensing ESOS in the books? Yes, it is a must. Someone has got to pay for it and it is an EXPENSE for the company. The shareholders has the right to know how much is the total expenses. Right?

So what's my problem?

Aha... if the company does not MAKE so much money... why should the ESOS be more than what the company make?

Does these employees deserve their ESOS?

Think about it.

That I think should be the most important thing to address!