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To: Oeconomicus who wrote (144514)	8/1/2002 12:41:39 PM
From: GST	Read Replies (1) \| Respond to of 164684

Bob: Options are just that -- options. The option consists of a volatility premium and a time premium. The day they are issued there is a dollar value for the time premium and a dollar value for the volatility premium. These are calculable even if they don't trade. By giving compensation in the form of a financial instrument which consists of these two premiums, it is specious to say that they only have value when they are exercised -- when there is no longer a volatility or time premium but there is an exercise value. They have value to the employee as compensation but not because they have an exercise value which cannot be known or calculated -- you are being compensated for your work by receiving a time premium and a volatility premium and that is what must be expensed. You are being paid with an option. What companies want to do is provide compensation by giving these valuable premiums to employees without acknowledging that they have done so.