Yeah, that's what happened. These guys both started working there a couple of years ago and watched their options skyrocket in the first year. Then in the second year, it all evaporated. Probably a case of the bitter apple. But the bottom line is that both of them are pissed that all the options they have received are very underwater and Cisco's last attempt to make good was to give them another allocation, rather than to reprice or exchange all their other worthless options. Sounds like a bad deal to me. I think I'd rather have been at Juniper, where they just exchanged all of your outstanding options for repriced ones.
For example, here's two scenarios:
* own 30K options at Cisco at $40 and then receive another allocation of 5K shares at $20; stock is now trading at $18
* own 30K options at Juniper at $200 and then receive an exchange for all the underwater options for a new price of $40; stock is now trading around $30
Both are a crappy deal, considering that they are all underwater. However, I'd rather be the Juniper guy, because when the economy turns around, my options will be worth more (assuming Cisco doesn't trounce them in the mean time).
Disclaimer: I don't know the exact amount that my friends have, but they both told me they received a lot less than their total allocation. Evidently, they get allocations every year and this allocation was around that size. But they were both a little disappointed after seeing what other companies did with their employees' underwater options.
All this may be a moot point, because both of them still work there and haven't left. So evidently, their disappointment wasn't enough to want to leave the company. Let's see what happens when the economy turns around, though. |
