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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (63643)	4/20/2003 7:37:06 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Don, your memory is short. You wrote: If, and this is a really big if, the management is living up to its fiduciary responsibility to maximize shareholder value, the increase in total company value (from a reduced cash salary requirement) will more than offset the increased share count dilution of existing shareholders, and thus provide them with a net benefit. In other words, shareholders give up less ("increased share count dilution") value than the value of the cash employees give up ("from a reduced cash salary"). Which I re-arranged and abbreviated as "IF management is exercising fiduciary duty THEN employees get less value from shareholders than the cash they forego [plus contrapositive]". Yet your response is: "No, this is not taken from the proper point of view. Fiduciary duty involves the duty of management to shareholders. Employees must look out for their own interest by either working for the company or going elsewhere." Management's fiduciary duty is to Shareholders. And it is to see that whatever choices they make (e.g. get employees to forego salary) by receiving something at a cost of reduced shareholder value results in LESS reduction in net shareholder value than otherwise. The current accounting for stock options is such that management is incented to HIDE as much shareholder value being given to employees as possible, and, when successful, to MAXIMIZE the amount of shareholder value being given to employees, themselves included. John