Zeev's Turnips - No Politics Message Board

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Strategies & Market Trends : Zeev's Turnips - No Politics

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To: Steve Lee who wrote (98505)	8/22/2002 2:38:46 PM
From: Timothy Liu	Read Replies (2) of 99280

Let's take a look at the simpler picture I described in previous post: instead of giving employee options, give them stock straight up. You will agree this is more expensive than options, right? Giving stock to employee is the same as sell stock on market and give the money to employee. Do you agree? The employee can always buy back the stock from the market when he get the money. Sell stock on the market will incur a positive cash flow coming in. It is offset by negative cash flow going out to the employee. There is no change in company cash position, operation and fundamentals. The fallacy in your description is not realizing with stock offering, we are tying company financial to stock market. You agree stock market is not a zero sum game. By offering stock (or stock option) the company transfer some of the wealth from shareholder to the employee while the company remains as sound as it was. Shareholders may not make as much money (or may lose money) while employees make money. Stock option make sure that Shareholder must make money for employee to make money - a win-win scenario. 0.02$ Tim

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