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Strategies & Market Trends : Good Investment Theses: VALUATIONS w/ FUNDAMENTAL ANALYSIS -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (129)	4/28/1999 1:50:00 AM
From: jbn3	Read Replies (1) \| Respond to of 160

Hi Chuz, We were both posing hypothetical cases, so I could as easily have postulated a scenario where the option issued by the company has a sufficiently high exercise price to zero out the corporate cost of the LEAP purchase + the repurchase price of the stock (LEAP strike) + the opportunity cost. I must admit that I do not know if such an opportunity is realistic. Hypothetically, however, does this not present the case for a positive and judicious use of ESO's--without the dilution we customarily see? And if the stock declines in price, the options do not get exercised, and corporate loses 'only' the LEAP premium + opportunity cost. I deem it safe to say that most companies do NOT price their incentive options a significant distance from the current equity price, and that your basic assumption of dilution will prove to be true in most instances. Likewise, I feel that the downward repricing of incentive options is plain and simple theft from the shareholders by management. best, jbn3