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To: Chuzzlewit who wrote (52261)	7/19/1998 1:29:00 AM
From: godellgo!!!	Read Replies (1) \| Respond to of 176387

<< You should also be aware that the greatest recipients of this shareholder largesse are the very few people occupying the highest levels of corporate management -- the CEOs and CFOs and Directors. It is one more example of executive greed at the expense of the shareholder.>> Well put Chuz.

To: Chuzzlewit who wrote (52261)	7/19/1998 2:55:00 AM
From: rudedog	Respond to of 176387

Chuz - The use of such generous option packages is a relatively new phenomenon I had an experience not too long ago which highlights where this might go. A west coast company wanted to engage us for some technology analysis but (as a small startup) had a problem with our fees. They offered instead to grant us stock options - we could 'share the risk, align our interests' etc. We declined this arrangement but it got me thinking. I'm not sure what would keep a company from paying the light bill with options. You could get to the ridiculous accounting position of a company which had no expenses - material just appears out of thin air, paid for by options which don't hit the P&L.

To: Chuzzlewit who wrote (52261)	7/19/1998 11:03:00 AM
From: LemurHouse	Read Replies (1) \| Respond to of 176387

Chuzz, Meathead and threaders: Thanks for the excellent discussion on the stock buyback and employee stock option incentive issues. I agree absolutely that current accounting practices hide the true cost of such programs. Like you, I routinely vote against the programs -- but not just because the accounting gimmickry hides the true costs, but because I am convinced that the costs are often excessive. The degree of excess can be extreme. Very much in excess of any rational compensation program, and have very, very serious costs for us, the shareholders. Its not a question of whether stock options are "good" or "bad". I'm all for compensating management and retaining good people. DELL has superb management and should be compensated accordingly. It is not a question of whether or not to have such programs, it is a question of magnitude -- how much is appropriate. We've heard that DELL is using 60% to 70% of its cash flow to finance the stock repurchase program. This is a VERY great deal of money. (Separate question: does it include the loan money, as has been posted on this thread before? If so, it is an even larger amount.) Its been posted that most, if not all, of the shares purchased in previous buybacks were used for the employee stock option program. Is it reasonable to expect that the stock currently being purchased will be used the same way? It would be very interesting if anyone on the thread could confirm this. If this is so, then as I say, its a very arge amount of money. As shareholders who are interested in increasing long-term shareholder value, as well as the long-term prospects of the company, we have to ask ourselves if this program is appropriate. What would be the effect on EPS if the money was not spent this way? While I have not done the math, I can imagine that the effect would be dramatic. This is not "anti-dell", or ungrateful to management. Quite the contrary. But in my view the magnitude of managements' stock option program is perhaps the biggest near-term challenge to shareholder value in what is otherwise a tremendous company and a tremendous investment.