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

To: Don Lloyd who wrote (76292)	2/20/2000 11:51:00 AM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

Don, >>Much too obvious to be true, IMO, although my record of convincing people of this is one of almost uniform failure.<< Just for the record, I do not think your arguments about this are without merit. In fact, I think they are extremely well reasoned and probably correct. I still just find it necessary to try to estimate the impact that the substitution of options for cash is having on reported results. Here's an example. When Warren Buffett bought General Re he immediately substituted a cash compensation plan for the existing stock option plan. There was an amount of cash that the management of General Re deemed satisfactory in order to get them to give up the options. Despite all the complications of that measurement related to taxes, stock price movements, repurchases, etc... I do believe it is useful to calculate that theoretical value for valuation purposes. I do it both ways. You did not fail to educate me. Wayne

To: Don Lloyd who wrote (76292)	2/20/2000 12:33:00 PM
From: Skeeter Bug	Read Replies (2) \| Respond to of 132070

don, there is actually a very large cost when employees exercise options. the company creates new shares, collect some $$ from said employee and the employee gets the stock. lots of accounting smooze follows. no cost to company? well, imagine that the stock options aren't granted, all else being equal. hmmmmm... the company could still printed and gave away said shares. this time they kept that money - all of it! that is what the company loses. right now, msft is going to lose the opportunity to sell $60 billion worth of shares and KEEP THE PROCEEDS. why? employee stock options. that is REAL MONEY the company REALLY loses out on.

To: Don Lloyd who wrote (76292)	2/20/2000 3:14:00 PM
From: pater tenebrarum	Respond to of 132070

Don, thank you for your detailed reply...and quite right, the cost is ultimately borne by the current shareholders. they have the choice of either seeing their stake diluted or seeing the mountain of debt on the companies books grow. of course as long as stock prices rise no-one is likely to complain. regards, hb