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To: Stock Farmer who wrote (29146)	2/24/2003 11:16:10 AM
From: LLCF	Read Replies (1) \| Respond to of 74559

Carnival Barkers come on hard times too: biz.yahoo.com They gotta get that white haired guy outta there and go for some sex-appeal! DAK

To: Stock Farmer who wrote (29146)	2/25/2003 2:16:40 AM
From: Don Lloyd	Read Replies (3) \| Respond to of 74559

John, However, if a company uses stock options, then I can expect the price of a slice to be based on the profits that the company generates, minus what it costs owners to redeem slices from the employees, plus whatever the owner gets when the employees exercise. That is, to a sole owner. And personally I can't figure out a reason why a company would be worth more or less to a sole owner than it would be to a group of N owners. Except that the shareholder meetings might be a lot easier to hold. So to me, for my purposes, the company deserves no different price than what a sole owner would reasonably pay if he had to pick up the tab for running the business himself. The whole tab. This is because you don't know or accept the subjective theory of value and the law of diminishing marginal utility. The value of something very much DOES depend on who owns it and in what quantity. If, in a city of a million people, there exist a total of one million chocolate bars, the market value of ONE chocolate bar is far different if all million bars belong to one person, as opposed to being distributed one to a person. All of the people in general have certain levels of both cash and chocolate bars. The law of diminishing marginal utility claims that the more of either an individual has, the lower he will subjectively value the marginal unit, to either acquire or to give up. This is what makes mutually beneficial exchange possible. If you are the person with one million chocolate bars and little or no cash, it stands to reason that you will be willing to give up a single chocolate bar for cash as you will likely be long dead before you can eat all of your million bars, even if you didn't get sick of eating them in the meantime. Conversely, someone with significant cash and no chocolate bars will likely reverse the order of values for at least some range of prices. This also explains why companies are brought public in the first place. The original owner values the cash that he can receive in exchange for distributing part of his shares to a large number of people, none of whom are initially overloaded with the company stock, but who have an excess of investable funds, more than the shares that he gives up. You can ask CB about this, but this means that the very concept of a market capitalization value of a company formed by multiplying the last market price by the total number of shares, is misleading and variant as the distribution of ownership changes. I can't see how you can worry about whatever cost the free ski passes have, as it only applies to the ski resort owner, not the company. Also, their cost would be marginal costs, like empty seats on an airline flight. The granting of an automobile to employees, OTOH, represents real costs to the company, although the costs are NOT necessarily tied to their value to the employee. The costs might effectively be wholesale, retail, or parts cost, all widely different depending on circumstances. If the car were a strictly limited edition, the cost should likely approach retail. It would approach wholesale if giving a car to the employee represents one that cannot be then sold to a dealer because of generally limited production. It would be parts cost if cars were made at such a quantity and rate that giving up a car to an employee only means that a dealer is only denied a car for 15 minutes or so. Cash is actually being transferred into the pockets of employees. This cash is coming from somewhere and for some reason. The cash is actually coming from shareholders. Exactly, but, in theory at least, it should be with both the permission, and to the benefit of, the shareholders. There is real money flowing. It is compensation. It is incurred by the company for the benefit of the company. There cannot really be a benefit to the company that is separate from an impact on the shareholders. A company is an artificial entity designed to be a container of shareholder assets. The costs of employee and other services all in the end impact shareholders, no matter by what complex path they do so. But the costs cannot be counted twice. Regards, Don