Huey, I've been following this discussion fairly closely and still feel dissatisfied, so I'm going to chime in here.
You remarked yesterday in response to the Vice Chairman's letter to the SEC that employees could participate in their company's progress by opening their wallets like the rest of us do. I agree with that.
I am not a philanthropic institute, and I don't like the idea of someone else telling me how to spend my money. But that's what happens whether you grant options or outright grants. The other day I was talking with another who said I really had no right to beef since I was in the secondary market, not an original investor. Wrong. The original investor sold his shares to someone, and somewhere along the line, they were sold to me. When I buy that stock, I am buying precisely the same rights as did the IPO buyer, and before him, the VC.
But somewhere long the line, today's managements and BoDs seem to have forgotten that. So, suppose you are the VC, and before you and the management cash out (take the company public), the management decides that it needs a massive option infusion, or additional stock grants, to motivate itself. Do you suppose for a moment that the VC of a still private company would accept that lying down? Doubtful.
To my way of thinking, the option and/or stock grant programs we see today are a way of recapturing for free that which was previously sold. They don't take the shares, but they've been taking their value down by diluting my right to a proportional share of earnings.
You are right about another point...people are beginning to catch on.
chaz |
