Replies to post #277700 on ERHC Energy Inc (ERHE)

[Krombacher]

Exactly. Thanks sideeki, the remarkable story behind the story of the stock options is where they set the vesting price. (the execution price was I believe in the 20s, if not mistaken but they can't exercise those options even if the stock is above 20 cents unless we hit the vesting price which is I think 75 cents for at least one month).

Why set it that high? That was my question to midtieroil. Did ERHE just randomly pull nonsense numbers out of the air? I can't think of a SINGLE company who has EVER issued stock options that vest at TEN TIMES the current price. Even if the price was somewhat more than it is now when those options were issued, I still cannot believe any company would issue options with vesting minimums that are that high.

Hence, they certainly CAN BE exercised AND NOT EXPIRE, *IF* SNP came along and said, we're buying you out for a $1.

Then no amount of selling by shareholders at a $1 will bring the stock price down below 75 cents, since you know that SNP is buying you out whether you sell in the market or later when they buy the remaining left over or convert the shares to SNP shares at the set conversion rate which equals $1 per share.

*IF* that is.

Krombacher

[midtieroil]

I don't think it is amazing that they set the option price so high given how bad the performance has been. I actually think it was a responsible thing to do. What I think is amazing is that many believed this option grant was some kind of indication that the share price was going to be over 75 cents soon. I certainly hope nobody bought this stock based on that hope because I believe the share price has gone down even more since the options were granted.

I actually like to give options to management as an incentive to perform. But that doesn't really work when you are already overpaying them in salary and when the option compensation is a minor component of their compensation package. Management should not be doing so well when shareholders aren't and it really doesn't incentivize them the way it is structured now. Options are especially good in small companies like ERHC that need to conserve cash. But this management doesn't seem that interested in conserving cash either.