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Strategies & Market Trends : Employee Stock Options - NQSOs & ISOs
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To: Stock Farmer who wrote (726)12/17/2004 1:23:47 PM
From: Don LloydRead Replies (1) of 786
 
John,

it's still value

Not as long as it's internal to the company and still under the ownership of the external shareholders.

If I have the only share to an envelope containing a single $5 bill, my holding is worth $5.

If 3 new shares are created inside the envelope, my holding is still worth $5.

If the three internal shares are distributed for $5 each to three new parties, my share is now only 1/4th of a $20 company, but is still worth $5. Since no existing shareholder value is created anew, the creation and distribution of the shares is pointless and destruction of the internal shares before distribution would be no loss.

Regards, Don
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