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To: Skeeter Bug who wrote (16382)	8/4/2002 3:12:46 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 42834

SB, don, the only problem i have with your answer to geode's question is that you didn't answer his question. ;-) geode is correct. IF you have identical companies "a" and "b," in parallel universes ("a" in the option free universe and "b" in the esop universe) and "b" issues employee stock options that go in the money and get exercised - say 1,000,000 shares - and company "a" sells 1,000,000 shares with no employee stock option obligation, company "a" has more capital with which to run its business - the difference in cash is what company "b" ended up forfeiting due to their options program. btw, if the amount of money employees receive from stock options isn't a real cost... why do companies deduct it from their taxes? It IS a real cost, but to the existing stockholders, not to the company that they own. To recognize that real cost for taxes, it is far more pragmatic to apply the deduction to the property that they own in common, the company, than to deal with all of them individually. your assertion there is no difference just isn't correct. there is often a BILLION dollar difference. If the company is potentially to be liquidated at any nanosecond, with the proceeds to flow to the shareholders, then comparing the proceeds just before a secondary stock offering at the market or a buyback of stock at the market with the proceeds just after gives identical results. Any capital raised or funds expended by the company directly and immediately impact the value of what it is the shareholders own, i.e. the company. Regards, Don