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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: EnricoPalazzo who wrote (43465)	6/14/2001 11:41:48 AM
From: hueyone	Read Replies (2) \| Respond to of 54805

Ethan, you make a good point in distinguishing between founders of a company and CEOs who came into a company later to drive phenomenal growth as did Chambers. Obviously, your argument is that Buffett has so many shares of BRK already that he does not need additional options. I don't believe founder Bill.Gates has been taking compensation in stock options either. I wish Tom Siebel and Larry Ellison were cognizant of this point. Those fellows can't seem to get enough options in spite of the huge chunks of company stock they already have as a result of founding their respective companies. I bring up the option "expense" problem periodically because in my opinion it is another important factor that needs to be considered in gauging the attractiveness of various investments. There is an interesting table included with the Option Sleight of Hand article showing what the impact would be on earnings of various companies if options were expensed: fortune.com Scroll down to the new economy companies. SEBL occupies the dubious number one position in the table. It looks like SEBL has enough potential option expense to wipe out SEBL's entire fiscal 2000 free cash flow per share at 53 cents per share that I calculated in my post yesterday. In my opinion, this is a problem. I am not just concerned about CEO options, but employee stock options as well. The original argument for employee options was to align employees interests with shareholder interests, but in recent years, employee options have become part of a culture of insider entitlement that is sometimes seemingly unrelated to outside shareholder interests. I get concerned when I see companies such as Cisco issue new employee stock options at a new low exercise price after the stock had already lost nearly 75% of its value. This is heads I win, tails you lose style of management, with the winner being the employee- insiders holders of new low priced options and the losers being the outside shareholders. If the options are repriced or new options are issued at lower price every time things go bad, how are employee interests aligned with mine as an outside shareholder? Best, Huey