Do employee options create ownership or just traders?
My issue with stock options today is the use of salary versus having ownership in the company. Used to be that options were given to create ownership by the employees, therefore having a long-term interest in the success and welfare of the company. Now days seems most employees are sellers verses holders, they claim the need to diversify. Which makes the options granted just money- no longer ownership in the company.
As a matter of reasoning, if the employees sell their options high then get the new grants at a lower price; they probably don't care about the long-term price of the stock. They are similar to trader's verses investors.
---Maybe I'm reading this wrong, but it doesn't sound like you understand the concept of "Vesting". Did you know, that when a Stock Option is Granted, you can't "Sell It" immediately? As a matter of fact, you can't even buy it and hold it immediately. There is a certain amount of time, that a person has to wait before that stock grant is eligible to be bought (Vested).
---For example, I'm looking at my stock option printout right now. the options that I got awarded in March of 2001, just vested in March of 2003. I couldn't actually buy the stock (and hold or sell) until March of 2003, and even then, if I don't "Exercise The Option" by March of 2011, the grant expires..... worthless. So I am definitely interested in the long term value and appreciation or depreciation of the stock.
---The second factor that comes into play, is "Stock Splits". At my company, If the stock splits, the number of options "On the Books" (Vested or not, but not exercised) Doubles, and the "Grant Price" (the price I have to pay to exercise) of each grouping of Stock Grants is cut in half.
---So to use the same example, "let's say" (hypothetically) that I was awarded 25 shares of those same options previously mentioned, and that the "Grant Price" was $25.68 (underwater at this point by the way). IF..... IF, by March of 2011, my Company's stock splits 2 for 1, Those Options would now be 50 shares, and the "Grant Price" would be cut in half, ie: $12.84. My "exercise" cost for EACH share of the new total of 50 shares. So, I would CERTAINLY have an interest in having the long term value of the stock increase. Assuming all that increase happened before 2011. If it didn't split, I would still have my original 25 shares @ $25.68. Hopefully, the stock will be higher than that before March of 2011. Otherwise, again.... Worthless.
I'm for employee ownership but I see too much insider selling at the highs therefore driving down the price for investor. Investors are at the disadvantage of the insiders. The insiders are no longer the same group that founded the company, so just give us the labor cost the investors have to pay to get the job done and work to protect the long-term value of the stock.
---Again, I have to disagree. I'm not "The same group that founded the company", but over the last decade, my contributions have saved the company millions of dollars, and resulted in so many improvements to productivity and cost savings, that I stopped counting long ago. Regardless of whether I was there in the beginning or not, I believe my contributions to the company, past, present, and in the future, means that I DESERVE those Options, for the work I've done in the past, and presumably the work I'll do in the future, even though "Outsiders" (Like Carl) have no clue of all the things that I've done to Earn Them.
Semi
AI
