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To: John Koligman who wrote (56948)	1/31/2002 11:38:21 AM
From: GVTucker	Read Replies (1) \| Respond to of 77397

John, RE: How is it even legal, let alone ethical, for a publicly traded firm to 'guarantee' this amount of cash for a CEO's trading screwup?? Why is that any different than any other perk or bonus that a CEO might get? WCOM covered Ebbers because they apparently thought that a poor Ebbers couldn't run WCOM as well. If enough shareholders disagreed, they could have Ebbers replaced. Gvien the performance of WCOM stock, though, it appears that most shareholders are voting with their feet rather than with their proxy.

To: John Koligman who wrote (56948)	1/31/2002 2:19:07 PM
From: JeffT	Respond to of 77397

As far as the legal issue is concerned, I will defer that to an attorney. I do not know the answer. As far as the ethical question is concerned, I can only give you my opinion, which is that the transaction is not one that I would want to be associated with in any way. If it is not wrong in the eyes of the SEC, then it should be. Just my humble opinion. Jeff

To: John Koligman who wrote (56948)	1/31/2002 6:34:10 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 77397

Hi John, How is it even legal, let alone ethical, for a publicly traded firm to 'guarantee' this amount of cash for a CEO's trading screwup?? Maybe we should attempt to transpose a point of view. Assuming the decision to exercise has been made, a CEO has two choices: exercise and hold, or exercise and sell. If he does the sell thing, he's not out of pocket, although the tax man cometh for a bit of a bigger bite. If he does the hold thing, he's got to raise margin. Which costs him carrying charges and a certain amount of risk and could hurt the company's image. I mean, CEO dumping shares? Do insider sales mean anything? [EDIT: forgot also that he probably owes AMT to the tune of lots... which he needs to cover] Now, me, I've learned my lesson by watching others: don't owe taxes without reserving the cash to cover them. Hard to imagine a guy with the savvy to ride WCOM not thinking similarly. So the "right" thing to do is to exercise and sell. Particularly if one thinks that the stock is kinda high at the moment. Let's pretend we're the board of Directors. Being a smart person and a responsible leader, our CEO comes to us and says, just to let you know, I plan to exercise 11 million options. We check the daily churn volume, and we go momentarily white. Savy guy expected this. And he's got a deal ready: "Your choice: if you guarantee my margin loan, I'll carry the cost & pick it up on the other side with the tax break. Otherwise I sell to cover cost. Your risk is that the stock tanks. We hum and haw and do the math: 3 billion shares... he's asking us to guarantee a loan in the amount of $0.06 per share... against the impact of dumping a third of the daily trade volume and the negative implications of a selling CEO on the insider reports... ... and we don't think that the stock will tank (otherwise we'd have sold our positions too and maybe even resigned)... so our bias is that the loan is secure... ... and the compensation committee did think the guy was pretty darn good to the tune of ten million smackers... ... and all this and more goes through our minds in the moment as we deliberate on his request. Which isn't an easy call. Maybe shareholders benefited in the instant (to the tune of $0.06 per share) when some message board flashed up the insider report citing that the CEO had so much confidence he exercised options and kept them. If the market hadn't tanked, wouldn't the BOD have been praised for taking action to avoid artificial stock price depression at virtually no cost? Dunno. So me, I have difficulty passing retrospective judgements. Especially because in the moment the BOD doesn't have the benefit of hindsight. They lack the distancing effect and perfect knowledge available to those who get to sit in judgement, staring at the phosphor like armchair quarterbacks... And sometimes the calls they make hurt. This one the tune of $0.03 per share or thereabouts. Which isn't much in the grand scheme of things. Hey, WCOM went up $0.20 today. So despite the fact that to us minions the 180 millions looks like a large number, really it's lost in the win-some/lose-some noise.