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

To: RetiredNow who wrote (64613)	9/15/2003 10:29:29 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 77400

mm, Don, if what you say is true, that "the value of the granted stock or options to the company is not difficult to calculate at all, because it is PRECISELY ZERO", then why wouldn't a company issue stock options and shares to suppliers and employees ad infinitum? While your answers are likely fine, the real answer is much simpler. In an ideal world, every management decision would be taken in an attempt to maximize shareholder value. This is not at all the same as maximizing the value of the company itself. Management should only make stock and option grants to the extent that they provide a net overall benefit to the shareholders. The company itself, owned by the shareholders, effectively becomes more valuable as a result of the grants. This must be balanced by the cost to shareholders due to the dilution of their ownership. Every individual grant for every individual company will be different in terms of whether it provides a net benefit to shareholders. In addition, grants will be limited by the willingness of the employees to accept a given level of grants for a given level of salary reduction. Regards, Don