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To: Don Lloyd who wrote (16443)	8/9/2002 11:20:28 AM
From: Skeeter Bug	Read Replies (1) \| Respond to of 42834

The argument your CEOs are making is irrelevant, as there is never a cash cost to the company. don, that simply isn't true. when a company back shares they gave as options as part of a plan to keep outstanding shares at a given level, they do so with CASH. that COSTS. real money, too. this costs companies BILLIONS. i agree there isn't necessarily a cost. i agree they are two different transactions. but they are related. make no mistake.

To: Don Lloyd who wrote (16443)	8/9/2002 12:53:52 PM
From: Simba	Read Replies (1) \| Respond to of 42834

Don: I think you did not get my point. First of all no cash is being paid by the shareholder to the optionee directly. There is no direct cash expense for the shareholder. You are imputing this expense from the taxed being paid by the optionee but the same expense can be imputed to the corporation as well. This is particularly true for a buy-and-holder of the stock. He never sells so you cannot even impute a cash expense on such a shareholder. In particular the shareholder cannot show an expense or a capital loss on his W2 just like he cannot do so on any stock that he has not yet sold at a loss. The CEO and CFOs of Intel, CSCO claim it is unfair to show a non-cash expense at the time (read quarter) of exercise of the stock. Their claim is accounting experts have no clear method to charge the expense, the amount of it and also the timing of it. The same issues exist for the shareholder who has did not sell in the same quarter as when the options are exercised. He does not have a capital loss (or a cash expense) until he sells. The company should not get a tax deduction for this and get artificial saving which they can re-invest compared to a company which pays expense by direct cash or stock. Basically the CEOs who do not want to take a non-cash expense cannot have the cake and eat it too. Either take a non-cash expense with its attendant difficulties or don't take it but then become ineligible for the tax deduction. Simba