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Politics : Ask Michael Burke
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To: Bilow who wrote (83100)8/18/2000 3:37:59 AM
From: Don Lloyd  Read Replies (2) of 132070
 
Carl -

[...The current SEC rules are for the value of employee stock options is zero. I believe that this underestimates both the value of the stock option to the employee, and the cost of the stock option to the shareholders....]

1. The SEC should have no interest in the value to the employee.

2. The option grant is made by the shareholders and is an offer of partnership/ownership. If the shareholders did not believe that even their diluted stake would be enhanced by the grants, the offers would not be made. The loss to the existing shareholders either is, or should be entirely captured by the increase in share count. Any additional depredation would be adding insult to injury.

3. If I, as a non-owner, want to buy the entire company, the total value will depend entirely on the accounting dollar entries. If the existing shareholders decide to dilute their shares in any way, in any amount, it will not affect the total company value.

Regards, Don
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