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Subject:  CCL: Employee Stock Options - Part I Date:  1/4/2004  11:37 AM
Author:  FoolishCop Number:  27154 of 46903

I wanted to take a look at how Carnival used or abused stock options, and what effect that might have on the company's performance. Interestingly, the form on which option grants are disclosed, a DEF-14A, was not filed for 2003, though there had been such forms filed previously each year going all the way back to 1995, generally in March of the year.

In 2002, however, according to its 10-K, Carnival could grant as many as 40 million option shares, though no one person could receive more than 2 million shares.

After reviewing Carnival's ESO grants, it does not appear that the company is an overt abuser. In 2001, stock options represented just 0.4% of all the shares outstanding; in 2002, that had jumped to 2.2%, still not an unreasonable amount, though it's reaching the limits. I've seen Fool articles suggesting that "abuse" would begin somewhere north of 3%.

What I noted with the 2