Scratching around on my hardisk for QCOM share data, I found this. I had saved on 5/7/99 and I do not remember ever seeing it. (Memory first to go?) Have you seen this, make sense? Some of it sounds familar.... Where was it posted?
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So let's try this: for company X::
In 1989 you are a small company with 350 employees and your stock isn't public. You continue to give your employees options and discover they work like dogs for you. You say to yourself hey this works well and you continue to give out options. Next thing you know it is 1994, you have around 3000 employees, and you still give them options after all the stock isn't moving much so no harm done. You give them the options so years 2,3,4 are at 20% and year 5 is 40%. Then in 1996 you find your stock still isn't moving much so you change your option plan to 20% each year. All this time the option plan had the employees working all kinds of hours and giving their all to the company. You have a history of giving employees options every six months because it works sooo well. You become a title happy company and have more directors, VPs, senior staff employees and other titles then ever. This whole time you are giving out stock options every six months along with almost every promotion. In 1998 we start a new company and move employees. Hell let them keep their options, stock isn't moving. Next thing you know it is January 1999 and you have 10,000 employees. It is clear to you your war with the enemy across the sea is about to end. You start talking about how things will start happening to drive the stock up. You even state this in a sails meeting.
Then sometime you wake up and it becomes clear you have given out too many options to the employees. You start to add up the numbers::
10,000 employees about 80% hold stock and because of all the review and promotions you have given out the average employee has at least 5,000 shares. Lets see 8,000 X 5,000 = 40,000,000 options that could vest for employees.
What to do?? First we will lay off some and keep their options to see what happens and at the same time we will ship out some of the old employees that have 40% vesting this year. Hell we can include a lot of those over 40 years old after all they don't golf or party with their young bosses with less experience but do have suck-up skills or have a bloodline connection within the company. Now lets say this company has a Market cap of 14 billion and a stock price of $216 and the average employee option price is $36. Well this means we have 40,000,000 employ options which could vest with a spread of $180 for a total of $7,200,000,000 OH HELL 7.2 billion to employees we can't have this we MUST get those options back!!. You all know the rest of the story. Now of course this is for company X, not any real company. |
