Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Mar 19, 2022 11:13:12 GMT -5
|
|
haapai
Junior Associate
Character
Joined: Dec 20, 2010 20:40:06 GMT -5
Posts: 5,880
Member is Online
|
Post by haapai on Mar 19, 2022 12:31:10 GMT -5
Oh boy!
<deep breath> It is really hard to value an option at the time that it is issued.
I've deleted everything that I had typed about how the IRS values options when they are issued, how Black-Scholes can be used to approximate the value of a European-style option with a fixed strike date, and how much more valuable US-style options with wide-open exercise dates are especially if the person holding them has some ability to smooth earnings and send the value of the underlying stock upwards.
In short, there is no functional way to limit the amount of income that C-suite-ers eventually get from options, and any attempt to limit this, short of not giving them stock options, is probably going to under-estimate the value of options that they are granted to such a degree that the very folks that proposed limiting C-suite compensation by this mechanism are going to be called useful idiots, at best.
|
|
jerseygirl
Senior Member
Joined: May 13, 2018 7:43:08 GMT -5
Posts: 4,766
|
Post by jerseygirl on Mar 19, 2022 12:57:37 GMT -5
Options are an unknown when given. I received about 1000 on signing on to my job at a small pharma. Worth about $25 at the stock price then. But I couldn’t cash them in for about 5 years. At 5 years they were worth only $4 at the stock price then - so worth nothing - pay $25 for a $4 stock? I held on till a drug that I worked on for about 7 years was approved. Company was sold and stock went up to $58 . So made money but 7 years prior an unknown snd for much of the time basically worthless
Stock options given to CEOs cost little st the time - it’s just a possibility of future payment. But a big incentive to increase value of company and therefore the stock option
So yeah CEOs make a lot - if the SOs actually increase in value. The company doesn’t actually pay the CEO that money, it comes from sale of the SO in the market
Would the worker bees really be content with or even be able to delay their pay for 5 years(at least) with no promise of actual amount of $ ?? Capitalism - you risk, you (sometimes) win
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,030
|
Post by Rukh O'Rorke on Mar 19, 2022 13:14:52 GMT -5
Options are an unknown when given. I received about 1000 on signing on to my job at a small pharma. Worth about $25 at the stock price then. But I couldn’t cash them in for about 5 years. At 5 years they were worth only $4 at the stock price then - so worth nothing - pay $25 for a $4 stock? I held on till a drug that I worked on for about 7 years was approved. Company was sold and stock went up to $58 . So made money but 7 years prior an unknown snd for much of the time basically worthless Stock options given to CEOs cost little st the time - it’s just a possibility of future payment. But a big incentive to increase value of company and therefore the stock option So yeah CEOs make a lot - if the SOs actually increase in value. The company doesn’t actually pay the CEO that money, it comes from sale of the SO in the market Would the worker bees really be content with or even be able to delay their pay for 5 years(at least) with no promise of actual amount of $ ?? Capitalism - you risk, you (sometimes) win coomon! these days ceos aleays win! take the helm of a profittable company, run it into bankruptcy, get fired, and walk away with millions. and plenty of delayed comp at far lower levels.
|
|
Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Mar 19, 2022 13:21:14 GMT -5
Options are an unknown when given. I received about 1000 on signing on to my job at a small pharma. Worth about $25 at the stock price then. But I couldn’t cash them in for about 5 years. At 5 years they were worth only $4 at the stock price then - so worth nothing - pay $25 for a $4 stock? I held on till a drug that I worked on for about 7 years was approved. Company was sold and stock went up to $58 . So made money but 7 years prior an unknown snd for much of the time basically worthless Stock options given to CEOs cost little st the time - it’s just a possibility of future payment. But a big incentive to increase value of company and therefore the stock option So yeah CEOs make a lot - if the SOs actually increase in value. The company doesn’t actually pay the CEO that money, it comes from sale of the SO in the market Would the worker bees really be content with or even be able to delay their pay for 5 years(at least) with no promise of actual amount of $ ?? Capitalism - you risk, you (sometimes) win They dilute shareholder holdings. Perhaps the worker bees should be given some options instead, since their pay only rose 18% over that long period.
|
|
Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Mar 19, 2022 13:23:36 GMT -5
Oh boy!
<deep breath> It is really hard to value an option at the time that it is issued.
I've deleted everything that I had typed about how the IRS values options when they are issued, how Black-Scholes can be used to approximate the value of a European-style option with a fixed strike date, and how much more valuable US-style options with wide-open exercise dates are especially if the person holding them has some ability to smooth earnings and send the value of the underlying stock upwards.
In short, there is no functional way to limit the amount of income that C-suite-ers eventually get from options, and any attempt to limit this, short of not giving them stock options, is probably going to under-estimate the value of options that they are granted to such a degree that the very folks that proposed limiting C-suite compensation by this mechanism are going to be called useful idiots, at best.
So they're offset by current year options. Too much? No options this year. But really, if there is a will, there is a way. CEO options limited to # of options worker bees get.
|
|
haapai
Junior Associate
Character
Joined: Dec 20, 2010 20:40:06 GMT -5
Posts: 5,880
Member is Online
|
Post by haapai on Mar 19, 2022 14:20:16 GMT -5
Hmmm.. .
So as long as someone who could be described as being a "worker bee" has a shot at a shot, everything is cool?
So a bunch of corporate stuffed shifts are green-lighted for options as long as an equal number of options are given to "worker bees", regardless of whether those "worker bees" can make those options valuable.
Are you really saying that it is cool that a big-wig's stock options, that are not predicted to be worth anything for five years, are okay as long as part-time, uninsured cashiers, who hold out for that long, uninsured and underpaid, have been given a option that they have almost no opportunity to use?
I don't think you have a clue how gross what you are suggesting is. Your solution suggests, justifies, and absolves something even more grotesque.
|
|
Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Mar 19, 2022 14:37:42 GMT -5
Hmmm.. .
So as long as someone who could be described as being a "worker bee" has a shot at a shot, everything is cool?
So a bunch of corporate stuffed shifts are green-lighted for options as long as an equal number of options are given to "worker bees", regardless of whether those "worker bees" can make those options valuable.
Are you really saying that it is cool that a big-wig's stock options, that are not predicted to be worth anything for five years, are okay as long as part-time, uninsured cashiers, who hold out for that long, uninsured and underpaid, have been given a option that they have almost no opportunity to use?
I don't think you have a clue how gross what you are suggesting is. Your solution suggests, justifies, and absolves something even more grotesque.
I'm doing no such thing. I'm brainstorming ideas how more of the gains can be shifted from c-suite to the worker bees. You are free to come up with better ideas of your own, but seem to be stuck on what is and not what can be.
|
|
jerseygirl
Senior Member
Joined: May 13, 2018 7:43:08 GMT -5
Posts: 4,766
|
Post by jerseygirl on Mar 19, 2022 15:34:57 GMT -5
Actually quite a number of companies now give options to workers who aren’t in management
|
|
laterbloomer
Senior Member
Joined: Dec 26, 2018 0:50:42 GMT -5
Posts: 4,348
|
Post by laterbloomer on Mar 19, 2022 15:38:26 GMT -5
Options are an unknown when given. I received about 1000 on signing on to my job at a small pharma. Worth about $25 at the stock price then. But I couldn’t cash them in for about 5 years. At 5 years they were worth only $4 at the stock price then - so worth nothing - pay $25 for a $4 stock? I held on till a drug that I worked on for about 7 years was approved. Company was sold and stock went up to $58 . So made money but 7 years prior an unknown snd for much of the time basically worthless Stock options given to CEOs cost little st the time - it’s just a possibility of future payment. But a big incentive to increase value of company and therefore the stock option So yeah CEOs make a lot - if the SOs actually increase in value. The company doesn’t actually pay the CEO that money, it comes from sale of the SO in the market Would the worker bees really be content with or even be able to delay their pay for 5 years(at least) with no promise of actual amount of $ ?? Capitalism - you risk, you (sometimes) win If stock options cost so little to the company why not give them to the workers too? For the record CEO's get stock options AND a salary and a bunch of other compensation. It's not like they're living on nothing until the stock gains value.
|
|
Deleted
Joined: Apr 24, 2024 18:47:05 GMT -5
Posts: 0
|
Post by Deleted on Mar 19, 2022 16:33:26 GMT -5
I worked for my previous employer for a little over 2 years. Soon after I was hired, they started a new benefit which was giving us stock options. They gave us 2, maybe a year apart while I was working there. The first one vested 2 months after I started my current job, so when I accepted the new job, I went part time at the first job, to stay employed there until after I could sell the stock. I was tired as hell, working 2 jobs and being a single parent with a 4yo and 6yo, but I wanted that money from selling the stock.
The day I was eligible, I sold it all, and resigned. I walked away with $10k, which seemed pretty awesome at the time. I didn’t know y’all back then, it was in the late 90’s, I couldn’t even ask Google. And all I know about stock options today is what I just wrote lol. So in hindsight, idk if once it was vested, it was “mine” forever. Which would mean I should’ve kept it. The company is still doing very well.
|
|
|
Post by minnesotapaintlady on Mar 19, 2022 18:56:51 GMT -5
Actually quite a number of companies now give options to workers who aren’t in management Yes, my ex got options every year at his company and he's in IT, not management. Even the warehouse workers got them.
|
|
tskeeter
Junior Associate
Joined: Mar 20, 2011 19:37:45 GMT -5
Posts: 6,831
|
Post by tskeeter on Mar 20, 2022 19:21:57 GMT -5
Options are an unknown when given. I received about 1000 on signing on to my job at a small pharma. Worth about $25 at the stock price then. But I couldn’t cash them in for about 5 years. At 5 years they were worth only $4 at the stock price then - so worth nothing - pay $25 for a $4 stock? I held on till a drug that I worked on for about 7 years was approved. Company was sold and stock went up to $58 . So made money but 7 years prior an unknown snd for much of the time basically worthless Stock options given to CEOs cost little st the time - it’s just a possibility of future payment. But a big incentive to increase value of company and therefore the stock option So yeah CEOs make a lot - if the SOs actually increase in value. The company doesn’t actually pay the CEO that money, it comes from sale of the SO in the market Would the worker bees really be content with or even be able to delay their pay for 5 years(at least) with no promise of actual amount of $ ?? Capitalism - you risk, you (sometimes) win It’s been my observation that worker bees aren’t really fans of compensation that is not cash. As a corporate takeover defense, one of my employers decided to give the worker bees stock options. Not as replacement for part of their existing compensation, but as a bonus. Within 90 days of the date the stock options became exercisable, about 50% of the worker bees had converted their stock options to cash. They traded 10% annual appreciation in stock price and 3% annual dividends for cash in their pocket that they could spend today. I suspect that by a year after the option exercise date only 25% of the worker bees still had their stock options or the shares of stock.
|
|
jerseygirl
Senior Member
Joined: May 13, 2018 7:43:08 GMT -5
Posts: 4,766
|
Post by jerseygirl on Mar 20, 2022 21:09:01 GMT -5
I worked for a Dutch company and they gave 2 shares to all employees. The US employees said why such a ridiculous small number? The Dutch factory workers were quite incensed and wanted to renounce the shares. Apparently they felt having shares somehow would make them part of management and somehow put more (unwanted) responsibility required of them
|
|