Replies to post #142093 on Wave Systems Corp. (fka WAVXQ)

[rachelelise]

Jules

lets be reasonable here. There is no rational reason to excercise under water options since you could do better and buy the stock on the open market. I think that a lot of people here could use a lesson on the construction and economics of qualified and non qualified options as it seems there is an unven understanding of just what they are.

Going back to another post, just becuase they are authorized doesn't mean they can be voted by anyone and it has no immediate bearing on maintaining control of the company.

One reason I was thrown off earlier is that I have more often seen the term "ESOP" to mean employee stock ownership plan - an approach where shares are actually set aside in antrust and gradually given to employees threw annual company payments - like a profit sharing plan. Here esop refers to the option plan. In the former case, the trustee of the esop could indeed vote with management since the shares would be issued and owned by the trust.

Finally one positive (if you could it that) aspect of the underwater options is that if they expire then they do not become dilutive (they disappear) so at least some fraction of the new authorization would replace older owns albeit at likely a much lower strike price.

[RootOfTrust]

julesg I don't see your point. Who would exercise options that were underwater? If you were underwater, you would have no equity. If you were abovewater (in-the-money), you could exercise, cash your equity, or use it to buy some shares. Sometimes they take the cash, sometimes they use some or all of the cash to buy shares...but if the options expire underwater, they are worthless.