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To: Don Lloyd who wrote (19227)	5/21/2002 6:44:49 PM
From: Raymond Duray	Read Replies (1) \| Respond to of 74559

Hi Don, Now that was a fine piece of debating on the merits of stock options. As stated, there's little that I can dispute. But my problem with the present structure of the compensation racket that managements have set up amounts to this: As a sole proprietor, I have for decades been compensated out of the revenues of my company. But what I see happening with so many public companies, especially those that are involved in the bleeding edge of technology, is that the compensation of the executives and key employees seems not to come out of the company's revenues, but rather out of the hide of the seduced investor class who simply keep re-anteing in a Ponzi scheme, while the purveyors of the game keep extracting their vigorish in the form of options compensation, forever diluting the sucker who thinks the public markets are a fair game. What I'm concerned about is that the present way that we use stock options as compensation is basically a fraud, with compensation not coming out of honest profits, but out of the wallets of people who are putting way to much faith in a very complicated shell game. Now I know that kind of talk won't play well in the boardroom but it will in the bedroom of most average savers in this country. I just try to look at this stock market and try to sort out the real opportunity from the illusions that the dream weavers and snake oil salesmen of Wall Street hope to peddle. And right now, Wall Street is coming up short as far as I can tell on having a believable story to sell. Re: Option grants result in real positive cash flows, There are two sides to this coin. You are arguing the standard line from the likes of T.J. Rodgers and John Doerr. So you're in very good and very smart company. But I'll suggest that there's a case to be made for the opposite opinion, that in fact what is created by options grants is a tax dodge, and a mis-statement of actual cash flows from the point of view of the passive shareholder. While you argue the case for management and their key personnel, I'm arguing the case for the average investor, whose interests are clearly not aligned whatsoever with those of management on the issue of stock option grants. So, it really simply gets down to a question of whose ox is getting gored. And I'm in agreement with Gretchen Morgenson of the NY Times (see article cited above), it's the chump with a 101(k), or an educational saving plan administered by a mutual fund who is continuously being diluted by the options racket. Thanks for your views. They were well written and well argued. I simply don't see what's in it for me. <g> Re: This is just S&P feathering its own nest, best categorized as 'pandering to economic illiterates'. Careful now Don, it's those "illiterates" who have to be suckered if there is to be a public market. Diss them too much and the whole house of cards called Wall Street comes tumbling down. <gg> All the best, Ray

To: Don Lloyd who wrote (19227)	5/22/2002 1:14:30 AM
From: Moominoid	Read Replies (2) \| Respond to of 74559

But if the company buys back the same number of shares as they issue for exercising options you won't see any dilution. But there is still a cost to shareholders which is seen in the equity account if the firm buys back shares high and issues cheap. Now if my suggestion that the firm should have to buy back at the same time as granting the option was the case the cost to shareholders would be the opportunity cost of that cash which could have been used for other purposes. This will depress profits... Maybe this is like a worse solution than the problem it is solving, but that would be very transparent. David