To explain what Groins is saying, I have provided the following example with extremes for simplicity:
You own 1000 shares of a company If that company is worth $100 million (market cap) with a share price of $1, there would have 100 million shares - if they offered another 100 million shares as options to the CEO at the current price; $1, the company would double in market cap but the % you own would half - dilution.
If the same company's share price increased to $10 a share prior to them offering the options to the CEO and the options were at a price of $10 (hence the company still needed the same amount of money; $100 million) then the CEO would only receive 10 million shares. your position would be diluted by 10% - plus you would have made 10 times on your money because the share price ran from $1 to $10.
The risk with the second one is that maybe big money (hedge funds, venture capitalists, directors, CEO, etc) do not want to invest in the company at $10, they would prefer to wait and see when it comercialises / improves / etc. Hence the company may not have the same access to capital and may fail to live up to it's potential.
It does suck watching others such as Wayne get a lot more benefit that we do, however, without them maybe we could be sitting on 100% loss.
I personally am happy to sit back and wait, while i do nothing to help the company except slowly add to my position when the price drops and write up little hot copper comments.
Not advice. DYOR
AVR Price at posting:
$18.74 Sentiment: Buy Disclosure: Held
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