Lizzie -
The dilution to shareholder value in issuing options at all is one issue. Backdating only results in a (usually) small difference between the price the grantee pays the company to exercise the options. It does not make a difference in terms of dilution, because the same number of shares is granted in any case.
If I am granted options for 10,000 shares at a price of $100, even though the share price was $1 more on the date when the shares were granted, then the company receives a whopping $10,000 less when I exercise my options. Even if the difference is $10, that's still only $100,000 less going back to the company.
With Apple, we're talking about that happening only a few times. It wasn't a standard practice for all options. So even though Apple's stock is more volatile than most, leading to greater differences between grant date and backdated prices, it just really doesn't add up to that much money.
And we are talking about a stock that has gone up tenfold in the past five years, which makes the claim of dilution of shareholder value seem ludicrous to me.
- Allen |
