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

To: Lizzie Tudor who wrote (64023)	5/14/2003 8:54:41 PM
From: BWAC	Read Replies (1) \| Respond to of 77400

Don't know. Lets say Company X has some sort of secondary stock offering registered. And they plan to periodically sell various lots. A particular lot is sold at $10 in year1. Another lot is sold in year2 at $15. Well heck, under options expense theory company X had an opportunity cost of $5 on those first shares. They could have gotten more. Whats the expense? Or even better compnay X sells a convertible bond. Collects some cash. (you know kinda like collecting cash at option exercise) Bond converts to shares at some fixed price, say 5% over stock price at bond issue date. (Now that wouldn't be an option would it?) Company expenses interest on bond. BUT, darn it, I want them to start expensing the opportunity cost on the 'option component' of the convertible bond. After all the 'option component' induced the bond buyer to accept a lower yield rate. Something bargained for, something gained. And Billy Bob cussed the best customer out yesterday and lost the million dollar account. Surely some expense must be imputed and estimated there based on the lost income or gross margin. We should probably start estimating the forward cost of lost income and its discounted effect on cash flow for 20 years. All cause Billy Bob couldn't keep his mouth shut. Since we can't fire him (union worker you know) we should also probably put a liability on the books for future estimated episodes.

To: Lizzie Tudor who wrote (64023)	5/14/2003 9:01:05 PM
From: BWAC	Read Replies (2) \| Respond to of 77400

Here's what I would do if I was running the company and in charge of performance incentives. Thank you for working hard this year. You may chose your bonus from the two plans below: A.) $100 B.) 100 options at 10% above todays price. Exercisable in 5 years. ------------------------------------ Bingo. You just fixed the compensation cost. $100. Whichever they chose. Employees chosing B, took it in leiu of $100 cash. Just need a few employees to accept the $100 cash instead.