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To: Lizzie Tudor who wrote (145496)	8/14/2002 3:20:22 PM
From: Oeconomicus	Respond to of 164684

And I'll take it one step further, the pre-ipo companies' options (who grant the largest amt of options) truly have no value even if they were to follow GST's logic. Did you know that even pre-IPO companies must, if they want a clean audit, calculate and expense the Black-Scholes value of any options they grant to non-employees (i.e. contract labor, consultants, advisors, or others who get options as compensation for services, but are not legally employees)? And since the auditors tend to want to use volatility assumptions based on public companies in the same industry, the numbers can get quite large. Actually, while the valuation of the options seemed silly to me, what seemed sillier was that the exact same options granted to employees under the same option plan were treated differently - i.e. not expensed. This is part of the reason I don't buy many of the arguments of those opposed entirely to expensing. Why one if not the other? Quibble with the method if you want, but why accept it in one case and reject it in the other? Just because one is a smaller number? Regards, Bob