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To: Bearded One who wrote (6996)	11/4/1997 4:08:00 PM
From: Jumper	Read Replies (1) \| Respond to of 18056

On the rocks biz.yahoo.com

To: Bearded One who wrote (6996)	11/4/1997 4:22:00 PM
From: IceShark	Read Replies (2) \| Respond to of 18056

Beard, No, no, no. You're going astray on your lesson and mixing 401(k)s with standard option plans. Item 2.a.) is what happens. Options are granted at then market price, shares are subsequently taken out of market, buyback puts buy (upward) pressure on stock, ESP looks better, stock price rises. Then employees exercise options buy selling such shares back into market in part or total, lets just say total for simplicity, and employees make money off a sure bet at exercise time between grant price and market. Upshot, all other things held constant, employees make money off share price rise, company records no expense, OS shares and EPS are the same after all the dust settles as before the program. 401(k) doesn't come into play. -g- But 5 mil just got sucked out of the equity markets. Neat game isn't it! And all on the company's nickel. Don't get me going on what happens when things do not go as planned and the company rejiggers down the option price, ala MU. Now get going on that homework! -g- Regards, Dan

To: Bearded One who wrote (6996)	11/4/1997 6:18:00 PM
From: Zeev Hed	Respond to of 18056

Bearded one, I do not know about the negative impact of these stock options. After all these are granted at the market price at the time of issue and very often well above the book value of the stock. If you look at it long term, it is not such a bad deal, they mainatin these receptionists loyalty, decrease turnover, and probably are given in lieu of raises. As long as these are not granted at humongous discounts (for ahich I have not seen evidence), it is fine. Of course, once the market comes back to earth, all these options can be used for wall paper. THis does not address the question of excessive options packages and pay to the chief hunchos, but that is a different question, and if you want abuses, there are plenty of these around. Zeev Zeev