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To: Don Lloyd who wrote (16383)	8/4/2002 5:42:09 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 42834

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. don, company "a" in my example is in better financial position than company "b" b/c the company got the ALL the proceeds from their 1,000,000 stock issuance instead of splitting it with the employees. there is, in fact, a very REAL cost to the company - not just the shareholders. having said that, this assumes that options don't produce higher output - which may or may not be valid. in the same way, i'm assuming that the options don't cause the management to take on poor risks and cook books to raid the company coffers.