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To: Cogito who wrote (55763)	8/12/2006 12:15:11 AM
From: Lizzie Tudor	Respond to of 213176

I had my first job in Silicon Valley in 1988 and that company (which was a fairly well known public company) granted all the employees 100 shares per year and the grant date was always set at the lowest price of the prior month to the grant. Then, the next year I had another job where I had hire on stock options and same deal, the options were priced at the lowest price of the quarter, to be approved at the next board meeting. IOW I did not know the grant price of the options when I took the job. Standard operating procedure and to be honest, I always thought it had more to do with RECORDKEEPING (the hassle of having to maintain records on literally thousands of grant dates for every hire on) vs. anything else. Options were not expensed, and nobody really thought of this as fraud. Now, after all this other fraud that has occurred the feds want to make an example out of some executives and some companies. Personally I think they may have overreached and there is some rumblings from fed people that that could be the case also. For example the Brocade case, if it was SOP for all these companies to do that, making an example of brocade is going to throw out the entire stock market baby with the bathwater. I don't think it is in the best interest of the USA to destroy the stock market and declare some widely used "grey area" as fraudulent which is exactly what the SEC is doing. I just did a google on "SEC stock options" and just today we have: CEC Entertainment, EPlus, First American Title Insurance, United Health, HCC Insurance, Chordiant, Verisign, Pixar, THQ, TEtra Tech, Sepracor, Delta Petroleum, Cablevision etc etc in addition to the well known ones Brocade Apple, Rambus etc. So there are many companies from many industries here and at some point a decision will have to be made as to how to handle this and I doubt personally it is delisting 200 companies. But you never know. Apple stock is closing well amist this so the market is a little numb at this point.

To: Cogito who wrote (55763)	8/12/2006 8:42:05 PM
From: JP Sullivan	Read Replies (2) \| Respond to of 213176

I don't see how options backdating is tantamount to pilfering the shareholders. It doesn't seem that it affects shareholders much. While I wouldn't consider it "pilfering", there is most definitely an impact on shareholders in the form of dilution. Say Acme Widgets had 10 million shares on January 1 , 2001 and shareholder equity of $100 million. Thus, theoretically, each share is worth $10. After a few years of handing out options with great enthusiasm, Acme now has 20 million shares outstanding on January 1, 2006. Since the company is profitable, shareholder equity has increased to $300 million. Each share is therefore worth $15. Now, that might seem great until you consider that each share could have been worth $30 if no options had been granted. In this oversimplified example, the shareholder has lost $15 per share in terms of equity. Certainly, we can argue that it would probably not have been possible to achieve the rise in equity without all those hardworking employees and the brilliant CEO to whom the options were granted. But that's another issue altogether. My point is that options most definitely affect the shareholder; if abused, the impact can be huge. -we-