The proposed 2005 option plan is another example of NEOM insiders putting their interests above and beyond the interests of the common stock holder.
The purpose of awarding options to officers is to align their interests with the interests of shareholders. However if NEOM officers can grant themselves options with an exercise price below the fair market value of the stock-- the incentive to build shareholder value no longer exists. The grantees can simply exercise their "in-the-money" options and immediately cash out without concern for creating value. In effect, they can use the company as their personal piggy bank at the expense of the shareholders, who experience dilution and downward pressure when the insiders monetize their position in the market.
If the awarded options were at fair market value, or above it -- in an effort to financially benefit from their option grants -- the officers would theoretically need to create value for the stock to appreciate before benefitting.
This, in combination with the SEDA and other financial arrangements with Cornell, speaks to NEOM management's disregard for the average shareholder of the company. The arrangements with Cornell ensure that there is always cash available to finance the officer's salary and bonuses, at the expense of the common stock holder. The proposed option plan just adds insult to injury.
Compare and contrast NEOM management taking a "me first" attitude to, say, Larry Ellison, or any number of technology executives who reduced their salary to $1 per year until certain, specific milestones were achieved.
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