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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (68976)	10/12/1999 10:55:00 AM
From: Freedom Fighter	Respond to of 132070

Don, >>>My claim is that the option grant process is a real problem for the shareholder, but not a direct cost to the company as a whole entity. Attempting to convert the dilution into a cash expense only confuses the issue. Valuation must take real dilution into account without allowing buybacks to disguise the issue. Free cash must either be invested in something or paid out as dividends.<< Agreed. I understand your point better now. Wayne

To: Don Lloyd who wrote (68976)	10/12/1999 7:48:00 PM
From: Michael Bakunin	Read Replies (1) \| Respond to of 132070

Here, I think, is where I weigh in. While I take both your and Wayne's points, I see you focus on economic costs and dilution. Conversely, I stick with trying to 'fix' GAAP. Sure, accounting's fake. Nevertheless, non-cash charges like goodwill and depreciation exist for a reason. I maintain options grants should be expensed by a non-cash charge as close as possible to the cost of inoculating against exercise. For the diamond miner, the costs of inoculation may be argued, but it seems to me that they are 1/1000th of the annual COGS. For Microsoft, the debate goes on, but it seems that the Black-Scholes value with reasonable inputs is a good start. -mb