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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 75.19-0.1%Jan 16 9:30 AM EST
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To: PMS Witch who wrote (47703)2/1/2001 10:45:48 AM
From: The Phoenix  Read Replies (2) of 77400
 
I think I already have...... and "error" is probably to harsh a word since there is certainly dilution. At issue is whether this is simply dilution - turning profits to the employee's at the shareholders expense - which would mean the shareholders were losing money while the employee's were gaining it... or a sharing of gains.

If the shareholders are losing money then the stock must be going down and as such the options are worthless and thus no dilution. If the stock is going up the shareholders gain, the options exercise and the employee gains, and yes there is dilution. Everyone - including the employee's that have exercised - has a smaller piece of a more valuable pie.

OG
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