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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Gary Ku who wrote (11781)	4/18/1998 11:02:00 AM
From: Eric Yang	Respond to of 213176

"Talking about tax, that's one reason why most companies don't pay executives too much stocks and options to dilute share holders's interest, unless if a company is in a dying stage." There you are..! Had you not draw attention to yourself with your ignorance I would have had a hard time finding you. You're the intellectual midget who claimed that the approval of 20 million shares of stock under the 1998 would mean giving away $500 million. Message 4039419 I meant to respond to your silly post but I was all caught up in the excitement of traffic school taxes last week. First of all, the proposal in the proxy was for 17 million shares not 20 million. I guess short sellers don't get a copy of the proxy so we won't penalize you for this minor error. But the major flaw in your statement is the implication that Apple is simply giving away these shares valued at $500 million. You took 20 million and multiplied it by $25/share and got $500 million...Wrong. The shares in question are being authorized as stock options. That means those who are granted the stock option have the right to exercise the option within a given period at the exercise price. In other words the executives are not getting the shares for free. They must pay for these stocks...at a discount perhaps but they still have to BUY it. They benefit from the difference between the exercise price and the stock price. For the sake of argument let's say that the exercise price is set at $23 (which it is not). Then given a market stock price of $28, the total value distributed to the executives would be 17 million X ($28-$23) = $85 million. And the various restrictions placed on stock options allow this asset to be capitalized upon over the course of several years. For every dollar the stock price goes up the value of this package increases by $17 million. This is not a bad thing... After all, when the stock price goes up by a dollar the shareholders are getting an additional $132 million for their stocks. It provides an incentive for the executives to do a good job. If the stock price falls below the exercise price then these options are essentially worthless. Under proposal No. 4 section (a) of the proxy edgar-online.com It says that the exercise price of "The exercise price of an incentive stock option may not be less than 100% of the fair market value of the Common Stock on the date such option is granted such option is granted" Thus if the option were granted to an executive today he or she would have the right to buy AAPL stock for about $28 per share within the next ten years. Sounds fair enough to me. Sure there will be a little dilution for the EPS but the current book value is only at about $9...and by paying $28 per share it would actually increase the book value of all of our stock! Thus if the stock price goes up it's a win-win situation for us the shareholder and the executives. Eric