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

To: Chuzzlewit who wrote (71116)	11/29/1999 8:23:00 PM
From: Don Lloyd	Respond to of 132070

CTC - [[...It finally occurred to me what was wrong with your ski-lift analogy. Those passes you talked about don't have a secondary market -- that is, they could only be used by the employee. But with stock options, there is a market for the new securities that are created. A fairer test is to imagine what might happen if the ski resort were required to honor those lift tickets when in the hands of non-employees...]] OK, we're getting closer. I believe that one of the claims I made was that price is meaningless without a market. In fact, the employee options do NOT have a market at all, although eventually the shares that may result will. Going back to the analogy, let's say that an employee sells the use of his pass to his brother for $100 and keeps the transaction a secret. In what way does this change anything for the company or even the resort owner? The company still benefits from the recruiting and retention tool and suffers no cost. Voluntary exchanges are mutually beneficial by definition and are not zero sum. Gains flow to both sides. One side's gain is not the other side's loss (or cost, in this case). Regards, Don