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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 83.64+0.6%9:59 AM EST
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To: RetiredNow who wrote (67906)5/18/2005 10:01:15 AM
From: Elroy  Read Replies (1) of 77400
 
They sell the securities for $1 when they are worth $3. Impacts:

Why would CSCO sell the securities to MS AND give them to their employees? It makes 100% more sense for CSCO to buy the securities from MS and then give them to CSCO employees. The the options expense is exactly what CSCO paid to MS. MS can then issue additional identical securities to sell to other MS customers, and voila, you've got a new market to trade.

CSCO gets a publicly available value for the options they give to their employees (whatever the market price is on the given day), CSCO gets an exact expense to account for options issuance (whatever they paid Morgan Stanley), and MS gets more securities to charge small commissions on, as well as a deeper relationship with CSCO.
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