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To: Casaubon who wrote (38922)	8/13/2002 10:07:44 AM
From: HighTech	Read Replies (2) \| Respond to of 52237

Aren't options already expensed in the financial statements? Don't accounting standards require expensing at the grant date already? Plus, fully diluted eps reveals the effect of all warrants, options, and convertible securities because such a reporting assumes all of those are in fact exercised, whether they have actually been or not. So the maximum dilutive effect is presented already per GAAP. So what is the big deal here? The company expenses the difference between the fair market value of the stock and the option price which will be paid by the employee. Is what every one is complaining about due to the fact that companies don't expense the fair value? How can that be an expense to the business when the employee may not exercise? Even if the employee exercises, the only expense to the company should be the amount THEY PAY (or expect to pay by expensing and later issuing stock) above what the employee pays - the difference between market price and option price - which is already expensed in GAAP financials at grant date and adjusted if warranted later. What is the big deal here? HT

To: Casaubon who wrote (38922)	8/13/2002 10:35:21 AM
From: TimbaBear	Read Replies (1) \| Respond to of 52237

Casaubon actually, if the granted options expire worthless, the company would have saved some labor costs So...under the method of accounting for options via the Black Box (excuse me, Black-Scholes) system, in this scenario the company would have recorded an expense it didn't have....and you believe this promotes clarity in reporting? Under the system I propose, where the company is not allowed to have shareholder dilution due to option exercise, the company still would have saved on employess expense, still would not have incurred any expense due to the strategy, and since they didn't have to buy any stock because nothing was exercised, their books both at the time of issuance of the option and its expiration would have been a more accurate reflection of its results. ...the investor would not have to absorb any dilution. Under my proposal, the investor does not have to absorb dilution in good times for the company or bad times. ...The risk would have been born solely by the employee... The proposal to expense at exercise doesn't affect the risk the employee assumes. The employee is still getting the option. . Black-Scholes type calc can have value. I never said Black Box (oops, there I go again!) didn't have value. I just indicate that the value is not in providing clarity for investors as to the true cost of a company doing business. Black-Scholes may have more effective utilization in options(puts and calls) pricing and evaluation. Timba