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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: Don Lloyd who wrote (105778)	6/17/2001 5:29:46 PM
From: Mark Adams	Read Replies (2) of 436258

Don, I appreciate the insight your counterpoint offers. But I wonder about the impact of moving the 'deferred salary expense' off the income statement when it comes to comparing companies earnings or growth rates. While it is true that the mix of cash compensation and option grant compensation make corporate and business comparisons between different companies difficult, it certainly does not justify double-counting of expenses. If company A issues 1000 options in lieu of higher salary, and company B issues 100000 options, when we compare their performance we may come to a false conclusion unless we have some way to quantify this 'hidden' expense. Perhaps a footnote to the financials on options costs (based on Black Scholes at time of issue) would allow a cleaner comparison- but would be of little help for those who rely on automated screens. But would greatly help those willing to dig into the quarterly and annual reports. As it is, we really have very little knowledge of how much equity is given to insiders outside of the executive suite. Am I all wet in this line of thinking? TIA

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