Tough TruthsThe most aggressive option issuers (and the most ardent and vocal option defenders) tend to be in the technology sector. Verity, a software concern with a $750 million market cap, is an example of a company that is aggressively effecting a transfer of ownership from shareholders to corporate employees. After reviewing Verity, it's hard to miss the obvious irony: The word verity means truth. The truth is, the number of options granted each year is outrageous:
|The Hard Truth About Options |
Here are the grants relative to share base
|Shares Outstanding Beg of Year||22,036||23,130||25,612||31,606||35,158|
|Annual Option Share Grants||5330||5604||6567||8418||7164|
|Annual Grants as a % Shares||24%||24%||26%||27%||20%|
|Source: Alsin Capital Management, SEC filings|
The grab for shareholder property at Verity, via stock options, is at jaw-dropping levels. As you can see in the table above, options grants as a percentage of total shares have hovered around the 25% mark since 1998. That's potentially diluting one-fourth of shareholders' property interest each and every year!