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To: my2boys who wrote (103055)	2/19/1999 2:59:00 PM
From: Chuzzlewit	Respond to of 176387

Steven's Dad Are not all costs to the company effectively shifted to the shareholders by virtue of the effect on stock value? How is this different from the use of stock options to pay salaries? Yes, but there is no explicit accounting of the cost when you use options. Everything is hidden. The effect does not show up in such commonly used metrics as gross margin, expense ratios or eps. Instead, we are expected to deal with it as shareholders experiencing continuing dilution. Another issue which I did not raise is that companies experiencing weak stock prices have a very nasty habit of "repricing" their options. SEG is a major offender here, and PSFT recently added its name to the list of transgressors, which includes such luminaries as IBM. This fact alone should give pause, because one of the two usually stated purposes of these options is to put management and and shareholders on the same side. The other, of course is to spare startups the cost of hiring top people and shifting the risk of success onto the employees. Ask BA shareholders how well that theory has worked out. This is a horrible practice that needs to be changed. TTFN, CTC