Quite frankly I don't give a damn who gets paid what.I don't know of any companies who don't have some sort of incentive or bonus program or stock option plans.
I agree with you that every company worth a whit has a stock option/bonus/incentive plan. What bugs me is that this one is obscene. Who gives out, in bonuses, 9 times the revenues for the quarter? That's ridiculous.
If they strictly had a traditional options program, where Samuels had been given beaucoup options at the end of last quarter at the strike price of 2 3/4 or whatever, I would not care so much, because A) the company would have had to authorize the shares so we would know exactly how much dilution would be and B) the charge against earnings would not have been so bad and C) nothing would have taken effect until he had exercised the options. This 2% of market cap increase that is charged against earnings every quarter is ridiculous.
What happens if the stock runs to 35 next quarter, and numbers come out that would have been profitable, but because of the approx $4 million charge, IATV continued to lose money?
Also, options only pay off if the stock goes up... but consider this scenario (I'm making up numbers)
50 million shares at $15 = $750MM market cap.
Stock price falls to $14. However an additional 20MM shares are issued in some major dilution.
So now, price is $14, 70 Million shares = $980MM market cap.
The market cap went up by $230 Million, so the execs get to pocket a cool $4.6 million as a reward for diluting the stock, even though the stock price went DOWN. What exactly are we giving them an "incentive" to do?
Mind you, I am 110% behind all the technology-related decisions these guys are making. They know their stuff and I'm confident the product will succeed... I really honestly feel like I'm arguing the difference between a $35 stock with this stupid plan or a $50 stock if they'd get rid of it (in about 6 months or so). I definitely think the stock will appreciate and would be shocked if it didn't double over the next 6-12 months. But there is a difference between having good technology and making good technical decisions in terms of getting your product out (on one hand) and making intelligent business decisions.
This bonus plan would prohibit IATV from becoming an "internet stock" - by that I mean a stock that would run to 100 without making a profit or coming close... because if this stock ran to $100, there would be $58 Million in bonuses paid out, which would eat up years of projected revenues and guarantee that the stock wouldn't turn a profit. So we're going to have to "settle" for a double instead of a 10-bagger.
-Fred |
