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Technology Stocks : PLASMA THERM (PTIS)
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To: Bigpoppabass who wrote (396)3/22/1998 11:54:00 AM
From: Bill Martin   of 509
 
Re: But I would never issue options to employees, which were already 2 dollars in the money.

I don't know what Plasma Therm in particular does, but it is common practice for companies to issue options to employees as of some official record date in the recent past. This means that sometimes you get an option already in the money and sometimes you get them already under water. This might be the case with PTIS for example if they used some December or January date for all 1Q98 options granted.

Also bear in mind that even though the options might be initially in the money, there is still plenty of incentive for employees. Typically these options are not vested (or whatever the right word is) for several years -- you can't cash them out tomorrow for a $2 profit. In 5 years, or whatever period PTIS uses, the stock will either be several times its current value or zero or something in between (how's that for precision forecasting <g>?) Employees are incented by the options to remain at the company until the options vest, and to get the value as high as possible in the interveneing years.

I'm not defending whatever it is that PTIS in particular is doing (since I don't know what that is), I'm just saying that you may well not have all the facts. If you're really interested in this, try calling PTIS share holder relations to see what their explanation is.

Good Luck.

Bill
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