T7, Maria has not been given free shares as you state , she has...

T7, Maria has not been given free shares as you state , she has been given a free option with performance hurdles. An interest free loan to buy shares with no recourse to her if the shares are less than 3c is just an option. Presumably it was done this was for employee tax reasons. So the question is ..... Is a 3c strike on an option when the shares are trading at 3c fair. Well if the shares are trading at 4c when she can exercise the call option she makes 1c times 12m ie 120,000. That sounds too generous to me because if the shares are only 4c then she should get zero... Given her decent salary. In other words the strike on the option should be about 5c, the number of 12m is fine and so are the hurdles. So if the shares are 10c then and all the hurdles are met she gets 5c times 12m ie 600,000. I am ok with that because shareholders would have all done well as well in that scenario