And THIS IS NOT FINANCIAL ADVICE - happy to be corrected.
Well perhaps they are not looking at it from the right perspective then, the option price is only a function of current low share price. Yeah, exactly, 12 months ago the share price was $0.35c, now options are being offered at 1/10 of that amount.
At the time when the SP was at 35c there were roughly 250m shares. Now there are almost 600m shares - an almost two fold increase.
Options were offered at $2.10 as a stretch target from the admittedly lofty heights of $1.80. Now the options were offered at 3c (and shares hit a low of 3c). That is a 98.3% decrease in share price.
Here is some perspective for those without.
In the last 9 years, the number of shares on issue (factoring in the consolidation has grown from the equivalent of 14 million shares to about 590 million shares (source is Commsec).
That is an increase of 4114% more shares than when I (and many others) first looked at this company.
2010 - 14.00m
2011 - 61.10m
2012 - 86.50m
2013 - 112.00m
2014 - 146.40m
2015 - 184.50m
2016 - 196.30m
2017 - 254.80m
2018 - 589.90m
To me this represents a criminal decimation of shareholder wealth. And where is the company now? Sweating on a deal to keep the company alive and stave off the administrators
And the 10 years to vest is great, because anyone that takes 10 years to vest their options will have remained employed by the company for that period. Again, you are wrong, they EXPIRE in 10 years. The recipients can convert at any time within the next 10 years. If the shares are 6c (current price, the recipient could convert today at 3.5c for a 71% profit. The likelihood is the shares will open significantly lower than current price of 6c once (if) they come out of suspension.
And I would also think the amount of options one gets at a low price is significantly less then what they would get at a higher price. Actually, no. Shares as an incentive are in lieu of cash (which the company has none of).
Any issue of shares will be based on some number determined by the company which is based on current share values. If the company was to say, we will offer you $15,000 worth of shares instead of paying you $10,000 (usually represented by a discount of some sort), then a person would be incentivised to take the shares over cash. The discounted premium is also offered as an offset to risk. Will the shares go up? Will the company still be here in 2 years?
Put yourself in an employees shoes who signed on a year or two ago with incentive options priced at 30cents or whatever, they’d be wondering why they didn’t take the job with our competition quite possibly. Put yourself in the shoes of the owners of the company. Money doesn't come out of thin air, it is earned or inherited. My losses on this investment are north of $150k. Ultimately my fault, but I (and many others on here) researched the company, and we based our investment decisions based on presentations by the CEO that were approved by the board.
Employees get paid a salary, and based on the cash burn at the company, salaries are at least competitive in the market.
So the low option price will actually have the effect of true incentive as we would all like to think the share price will go up in multiples from this level over the next 3 years if just a couple of things go our way, which is the earliest any of those options will vest, so the incentive will be for the employee to perform to ensure they remain employed to gain access to those options. Again, if the shares open and stay at the current price, the options are 71% in profit. Yes, it is an incentive, but right now if I was an employee, my concern is if the company is going to be there in 3 months, let alone 3 years.
(20min delay)