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To: rkral who wrote (180962)	4/30/2005 11:53:28 PM
From: Elmer Phud	Read Replies (1) \| Respond to of 186894

Ron You have investigated this far more than I have. What about farther back in time? the 70s & 80s?

To: rkral who wrote (180962)	5/1/2005 5:37:58 PM
From: Ali Chen	Respond to of 186894

Ron, "If you're just going to WAG it, I have no interest in continuing this discussion." Why are you so impatient? Instead of dazzling me with perceived precision of numbers and nit-picking on dates, why don't you admit few simple general facts? One fact is that the option granting scheme is a recursive process, and is pipelined over a decade. The other fact is that the practice of option grants began long before some companies were forced to buy their stock back to control dilution. Therefore, when buyback occurred first time, the shares were effectively reissued to current option exercisers since you can't claim that those shares were bought some years ago and the transaction bears no cost - because there were no buybacks before. Consequently, you can't claim that the bought-back stock is held to "back up" newly-issued option grants (because the bought-back pool was already consumed by current exercisers). This is my interpretation of option costs, and it is consistent with initial conditions of the scheme. Now, apply the same argument to each consecutive quarter or other characteristic period, it will consistently rolls over supporting my construction and interpretation of option costs. Conclusion: the Elmer's "zero-cost" scheme is wrong. Actually, I don't need any proof that Elmer's scheme is wrong because all accounting scholars and governing bodies already have concluded that options have cost. The elmer's "zero cost example" contradicts this established fact, so let's call it "Ephud's option accounting paradox" for future case studies and accounting-101. - Ali