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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.04

-1.3%

Jan 2 9:30 AM EST

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To: GVTucker who wrote (65479)	5/14/2004 12:52:40 PM
From: Kirk ©	Read Replies (1) of 77400

Black Scholes works well for options in a liquid market like future, pork bellies and individual stocks but how do you adjust the formula to account for employees who can not sell their options to someone else? I own some vacation land and part of a home with many, many others in my family. As a total it has good value but the lack of liquidity makes it worth far, far less than if I had the ability to sell it without all the right of first refusals, etc. As far as I am concerned Black Scholes is just the wrong way to account for the cost of options but I am still in favor of stopping the CEO larceny so I usually vote for expensing options. Lizzie could get over the start-up problems by the companies using restricted stock grants. Start out the gate accounting for these as actual shares so there is no dillution when "exercised." Then if an employee quits before they can get their shares, they are returned to the treasury with some sort of adjustment to the books that reflects a transfer of value back to the shareholders. Kirk

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