Siebel Gives Cash For Underwater Options Holders
from the realignment-necessary dept
Siebel has decided that repricing options for all their employees who have underwater options isn't a "fair" solution for "real" shareholders. So, instead, they're handing them cash or real Siebel stock. It's going to cost the company $64 million and members of the board of directors aren't allowed to participate. Again, I generally have issues with any sort of "repricing" or other such system, because I believe it defeats the purpose of offering the options in the first place. Also, this seems like a fairly costly solution, which doesn't seem like the smartest thing to do when the company is struggling (which isn't good for any shareholder).
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What's worse for shareholders...
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Re: What's worse for shareholders...
Also, there are other ways to keep good employees happy than repricing their options. Especially, these days when most employees could care less about the options they have.
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Re: What's worse for shareholders...
But speaking of repricing and whether options should be counted as an expense, assume you accept the argument that issuing options should not count as an expense. If so, then how about a plan where employee options automatically get repriced any time they're underwater? Of course, that sounds ludicrous, but if issuing options incurs no expense, why should it?
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No Subject Given
But Siebel's way makes the cost more explicit (it's expensive either way). Actually it's arguably better (for internal consumption) anyway in that it's a clear vote of confidence in employees who have not been laid off.
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Siebel Options Offer
One must consider the tax consequences of accepting cash in exchange for the employee options? When everything is considered it may be best to hold the options.
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