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To: Madharry who wrote (160037)	5/24/2004 3:18:39 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 164684

Madhaeey, Because the idea of granting options is that if executive performance results in the company doing well -share prices increase and both the shareholder and employee benefits. This is incomplete. Assuming that the combination of reduced cash salary, option exercise proceeds and tax deductions is sufficiently large, and the level of grants is sufficiently small, shareholders will benefit over a wide range of future stock prices, including all lower prices, even if the executive performance has nothing to do with it. Only in the case of much higher stock prices will the shareholders be worse off due to the option grants and they will only be worse off in a relative sense. Regards, Don