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To: paul_philp who wrote (62929)	2/5/2003 3:10:43 PM
From: Lizzie Tudor	Read Replies (2) \| Respond to of 77400

OTOTOTOT Paul, do you have a (brief) opinion on the double counting argument wrt expensing options (even if there was an accurate way to do it)... I think expensing is double counting and dilution is really the only result of options but not being a financial person I might be missing something. Lizzie

To: paul_philp who wrote (62929)	2/5/2003 5:34:40 PM
From: hueyone	Read Replies (2) \| Respond to of 77400

Hi Paul, You responded to a post where I was responding to Lizzie's oft posted statements, which tend to say to me that it is a foregone conclusion that Black Scholes is a flawed and bad solution to the problem. Of course, I agree that Black Scholes is not a great and perfect solution, but I also disagree that it is a foregone conclusion that Black Scholes should not even seriously be considered as a realistic remedy to the problem. I sought to engage Lizzie in further discussion, as did Rkal, as to where she sees the main problems in the Black Scholes model. Further regarding my post to Lizzie, since she keeps raising Black Scholes and Siebel as a problem, I also thought it was appropriate to post the fact that Tom Siebel saw fit to use Black Scholes to value the stock option buybacks that the company conducted in the third quarter. You then posted a very long piece titled "WHAT THE EXPERTS SAY" that probably included 40 some quotes from "experts", many of them one or two liners, and included no commentary of your own. So again, I thought it was entirely appropriate to respond with a piece suggesting that many experts think otherwise, including explanations as to why these experts think otherwise. But I even noted with a grinny thing that the experts I quoted were probably no less presumptuous than the experts you quoted in presuming they were speaking for all of the accounting and finance professions. And then I got this response from you: Simply being outraged and yelling loudly doesn't solve the problems. Are those italicized comments intended for me or are they simply generic comments intended to apply to the issue in general rather than me personally? And certainly that comment could not apply to the carefully written piece that I posted by the Harvard professors. You may not agree with them, but surely one could not characterize their piece as simply "being outraged and yelling loudly". The made a valiant effort to debunk, one by one, many of the common arguments against expensing stock options at date of grant using Black Scholes, and I suspect that the fellow with the Nobel prize in options, has a pretty good understanding of the many limitations that the Black Scholes model presents. If you are accusing me of simply yelling loudly and being outraged, then you are just flat out mistaken, Paul. I spend a great deal of time trying to analyze and understand the parameters of this problem, and it wouldn't surprise me if I haven't posted as many or more articles from more authors suggesting possible solutions for this problem as has anyone on SI. Even so, I admittedly still have a great deal to learn and understand about this issue and I am still learning more everyday. I am sure Ron would be glad to have you join in our discussions about these issues on the employee stock options thread and give us your additional perspective. Regards, Huey

To: paul_philp who wrote (62929)	2/5/2003 8:10:06 PM
From: RetiredNow	Read Replies (1) \| Respond to of 77400

Hi Paul, I wouldn't worry too much about Hueyone. It's become abundantly clear that he is only interested in his own delusions of erudition, rather than the merits or demerits of stock options expensing.

To: paul_philp who wrote (62929)	2/6/2003 12:52:14 PM
From: hueyone	Read Replies (1) \| Respond to of 77400

I am looking forward to the FASB recommendations. I don't have a lot hope for the FASB recommendations, but I sincerely hope I am wrong. In 1994 the FASB was blocked from implementing what was clearly their preferred solution, Black Scholes expensing of stock options on the income statement, by intense political pressure from Senator Joe Lieberman, and other Washington politicians that received massive Silicon Valley lobby money. Once again the high rollers of Silicon Valley are heavily lobbying Washington politicians to keep their free lunch options off the income statement. If the big money lobbies prevail again, it will be incumbent on investors to start seeing through this stock option ruse, and stop rewarding companies with rich stock prices that are heavily inflating reported earnings by failing to expense stock options. JMO, Huey