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Microcap & Penny Stocks : TSIS: WHAT IS GOING ON? -- Ignore unavailable to you. Want to Upgrade?

To: Fred Rollins who wrote (4864)	12/17/1998 8:21:00 AM
From: jmt	Read Replies (2) \| Respond to of 6931

Give employees an incentive to increase the stock price - instead of anincentive to dump the shares the first chance they get. The points you raise are good, but quite complex. Stock options as a form of compensation is now common. And it is being used more as a form of compensation rather than an incentive. If a company needs to attract high quality employees, they need to compensate them. Without positive cash flow, they can award the company stock options (dillutive) or sell shares on the open market to cover the increased salary expenses (dillutive). So the question becomes is it compensation, incentive, neither or both. A perspective employee is not going to join the company at a reduced salary for way out of the money options. One of the problems with options is they hide the true cost of compensating employees, moving salary expense from the P&L to the Balance sheet. But in a slow business environment, salary expense remains lower limiting the impact on earnings per share. And companies with good cash flow further hide the dilution by repurchasing shares on the open market to compensate. And re-pricing options, while common, is beginning to be frowned on by the investment community and the SEC. You raise a valid point, but the issues of options in regard to compensation and/or incentive are very complex and subjective. Even if options are priced at .30 and exercised, it does not mean the underlying shares will be sold. The management then has a more direct equity position in the company and still stand to reap significant rewards if they can sustainably drive the share price to $2. Good luck jmt