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Options Grantees Have Little to Fear Anytime Soon From SEC

A report that the agency is reviewing Net stock options valuation shouldn't keep Silicon Valley up at night.

It came as something of a surprise Tuesday to read on the front page of the dead-tree edition of a certain national daily business newspaper that "the SEC is reviewing Internet stock options, whose surging values are sparking debate over how to value them." Silicon Valley cares about such things because higher valuations for the options mean bigger tax implications for option grantees and bigger bottom-line dents to the grantors, that is, the companies doling out the goodies.

A scoop that needed following? Not exactly.

In fact, the full story deeper into the august paper actually is about a new-fangled option-valuation scheme dreamed up by headhunter

Spencer Stuart

, which has a "sizzling Internet practice," we learn. To buttress the claim that this piece should be teased as

major news

, the article notes that "even the Securities and Exchange Commission is giving (stock-option-valuation) another look." The article notes that proxy-disclosure rules last were updated in 1992, and it quotes an SEC spokesman saying, "Valuation of options is certainly something we're looking at."

Certainly something we're looking at? That sounds like the


confirming it is in fact monitoring troop movements in Russia. In short, it is exactly what the SEC says when it's got no clue about a subject or when absolutely nothing is going on.

And that's effectively what John Heine, the SEC's amiable and long-serving spokesman, had to say on the subject Tuesday. Yes, the SEC periodically looks at proxy rules, and yes, stock options make up a good portion of proxies, says Heine. But nothing specific is in the works.

"I think there've been any number of

commission officials who've said publicly we're looking at proxy rules currently," says Heine. "But options are not the only thing we're looking at. There's nothing on the table now."

More to the point, Heine details the tedious ins and outs of how the SEC


look at options valuation. First the staff would publish a proposed rule change in the

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SEC Digest

. None has appeared yet, he says. Then the commission would hold an open meeting. If it decided to proceed, the SEC would publish the proposal in the

Federal Register

. After a public comment period of between a month and half a year, the staff would make further recommendations, finalize the rule, resubmit it or withdraw the proposal.

Bottom line: Nothing's happening any time soon with stock-option valuation, from an SEC perspective. That sound you hear is the sigh of relief coming from the paper-rich up and down the clogged freeways between San Francisco and San Jose.

Babson's Choice

Remember all the way back to this past weekend, when Richard Babson of

Babson United

appeared on "" on the

Fox News Channel

? He was touting

MCI WorldCom



said that what

James J. Cramer

called a price war in long-distance service in fact would lead to greater volumes for the leaders.

Did Babson anticipate the

Wall Street Journal

article on Tuesday that "Phone War Prompts a Record Number of Calls"?

MCI WorldCom's shares fell 1 7/16, or 2%, Tuesday.



was down a similar percentage, and



jumped 4%. This price-war-vs.-marketing-war business bears watching.

Stop the Madness!

Just judging from the email flow, things are getting totally out of hand in the venture-capital/startup/Internet world. But then it has seemed that way for at least two years: too much money chasing too many deals being eagerly awaited by too many investors. Common sense suggests something cracks here at some point. But when? Consider ...

On Tuesday,

Fujitsu Computer Products of America

formed an Internet sales and distribution division, "a business unit dedicated to driving Internet-based sales and service for Fujitsu's entire line of storage and imaging products." How long ago did









put their products on the Web?

Melita International


(no, they don't they make coffee filters, they run call centers), which recently bought

eShare Technologies

, wants to talk about how it "is poised to become the leader in Internet-based customer-contact management."

, "a cutting-edge e-commerce site with quality outdoor recreation products, real time customer service, and comprehensive consumer information," raised $10.5 million from a group including

Trinity Ventures


APV Technology Ventures

, Ventures


Tango Partners



, the venture arm of



. Even the mishmash of VC firms is confusing.

And then there's

, "an online service for admins." Admins, for those not in touch with their politically correct side, are administrative assistants, as in, Take Your Administrative Assistant to Lunch Day. And according to, there are about 10.5 million admins in the U.S. who "spend" $200 billion annually. Sounds like a market, no? By the way,, which hasn't yet launched its service, has raised $6.5 million from

St. Paul Venture Capital


Sigma Partners


Doll Capital Management


It must end. And it won't be pretty. But at least after that things will be a little more peaceful.

Adam Lashinsky's column appears Mondays, Wednesdays and Fridays. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Lashinsky writes a column for Fortune called the Wired Investor, and is a frequent commentator on public radio's Marketplace program. He welcomes your feedback at