The reason it does effect the fundamentals of the company is that there is a clear (and repeated) signal by the company's management that they are out for themselves first and always. By pricing options to the benefit of insiders, the company loses, the shareholders lose and only the insiders benefit.
Keep in mind that the company issues options to insiders to reduce the insider's tax liability, so they can claim their "gains" as long term capital gains instead of as a cash bonus which would be taxed based on adjusted gross income. So immediately, the insiders have already made money by being issued options instead of getting a bonus.
Next, by timing the date of the options grants to coincide with the "lowest possible price", the insiders not only get a terrific bonus, they screw every other shareholder by getting the best (or lowest) possible grant price. Keep in mind that the insiders have to PAY THE COMPANY the options grant price. By timing the options grants to coincide with low stock prices, they are ripping off the company's shareholders.
These guys are simply too greedy, if the allegations are true.
They are not trying to run the business for the advancement of shareholders, they are out for the insiders, first, second and always. Who wants to own a stock where you always have to worry about what the management is going to do to ruin the stock's price? Who's to say that the company's management won't intentionally cause the stock price to crater just so they can price themselves some super cheap options?
It's too early to know exactly what has happened but it is very clear that what ever took place stinks to high heaven. When was the last time you saw the CEO, CFO and EVP put on admin leave because of a mistake? No, it certainly appears as though their were some greedy, money grubbing hogs at the helm of VTSS who just couldn't get their noses out of the company trough.
jmo
T.O. |
