Freeport-McMoRan (FCX)

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http://www.mccarthy.ca/article_detail.aspx?id=7264

What happens in the above case. Employees compensation is dilutive yet benifitial to cash flow due too the tax advantage achieved.

Now every dollar spent does not mean there will be dollar returned in sales. So how does this work. You issue a $100 dollars worth of equity above set above the par value too pay employees. The employees never see the shares only the cash raised.

To give the employee the hundred dollars 20% in corporate tax will be required.
A goods and service tax of 7% will be required to be paid.

$27 dollars in tax. Let’s look at the cost.

$100 in wages plus twenty two dollars in CPP and unemployment insurance.

Total $122 dollars

$27 - $122 = - $98 dollars

The government owes the company $98 dollars in taxable returned dollars.

Yesterday we had the bank pay tax dollars of investors to borrow there shares.

An investor pays a $1000 dollars. The market value was a $1 set at a par value of .0001. The company made a thousand dollar profit for the share holder. The company and share holder must pay out $500 in tax’s minus the $98 in losses so now the company owes $400 in tax’s and a $1000 too the investor.


The leverage of 1,000- 100 = 900 before tax’s
After tax’s $1250
1,500 - 122 = 1378 after tax’s


You can see that a 10% gain went too investors. The difference go to the founding fathers of the corporation.

As long as tax’s are being paid along with all other bills investors will benifit. As soon as tax’s fall short of payment “ held back “ the public investor will be delt a blow.


How are the numbers stacking up?