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To: James Clarke who wrote (14053)	3/1/2002 12:37:19 AM
From: TimF	Respond to of 78673

1) the scale Good point. 2) Income statement accounting is based on expenses being matched with revenues. Saying options show up in dilution doesn't cut it, because that shows up years later. Take a very clear example. I got paid last year. That showed up on my public company employer's income statement. I also got bonuses. That showed up on its income statement. (Don't worry, I'm not even a rounding error!). But they also gave me options. That was something of value paid to me for work I did last year, but it shows up nowhere on the company's financial statements. Whats the difference bewteen that and cash compensation IF THE INCOME STATEMENT IS SUPPOSED TO REFLECT WHAT IT COSTS TO COMPENSATE EMPLOYEES FOR THEIR SERVICES. Thats the problem. But it costs nothing. The options only cost the company a small amount to administer the options program. Yes they do have a cost to the shareholders in terms of dilution but that isn't a cost to the company it is just devideing the same company over more shares. But if you do decide to count that as a cost the cost of the dilution doesn't show up until and unless the stock is diluted. If they are never exercised there is no cost to the shareholders. If they are exercised the cost is the dilution and shouldn't be double counted by lowering earnings and spreading out the lower figure among more shares when you calculate EPS. Tim

To: James Clarke who wrote (14053)	3/1/2002 11:52:31 AM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78673

James, >I got paid last year. That showed up on my public >company employer's income statement. I also got bonuses. >That showed up on its income statement. > But they also gave me options. That was something of > value paid to me for work I did last year, >but it shows up nowhere on the company's financial > statements. And yet another non sequitur. My company is located in beautiful city of XXXXXXXX, but it does not show up as my compensation in its financial statements. My boss is a great person but it does not show up as my compensation in company's financial statements. But it should...it's compensation...because if I did not get it, I would leave for another company that paid higher salary, more stock options or was located in Hawaii... And I was not joking in another post. In right circumstances, I would work for FREE. How would you account for my compensation then? Add fictional "comparative salary" to the income statement? And how would that differ from me taking let's say MSFT options at strike price $1000? Jurgis - argue the real things like dilution, but don't draw illogical conclusions