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

To: Don Lloyd who wrote (64526)	9/14/2003 2:45:08 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Options, or stock, should be granted IF, and only IF, doing so benefits shareholders. Same applies to cash wages. Which are an expense. Just about every expense of the business (including issuing of options) is done with the express intent of making shareholders more wealthy. If I am a manager and spend $1 in wages to my employee and attract $100 from his effort, that $1 is an expense and the $99 difference is quite beneficial to the shareholders. If I spend $0 but instead promise him 1/100'th of what I'll get in the end and thus attract the same $100, then that promise is obviously an expense of the same magnitude as the cash payment of $1. And shareholders obviously still benefit by that same $99. Heck, maybe he even works harder and I get more than $100. But how I settle that promise relative to other promises I have made (e.g. to shareholders) is immaterial and irrelevant to whether or not it is an expense in the first place. It was clearly part and parcel of the price I paid to attract revenues, and thus the monetary value of that cost IS an expense that I incurred through my management decisions. Without question. And so I have an obligation to record the magnitude of that expense against the profits in my report to shareholders so that they can know how effective I am with their capital in generating real returns. John

To: Don Lloyd who wrote (64526)	9/14/2003 5:18:43 PM
From: RetiredNow	Respond to of 77400

Don, you have to admit that when companies give stock options to employees, they are giving shareholder value away to employees. You started your post off correctly when you said that options should only be given away if there was benefit to the company in doing so (i.e. more benefit acrues to shareholders than was given away in options value). You went wrong when you said the expense was phantom. It may be phantom to you, but when the company is giving away shares and decreasing the value of my own, I can assure you it is not a phantom expense to me.