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> anything to pay people in stock, since it just siphons off value from all existing stock wait what?
by MiroF 7y ago
> anything to pay people in stock, since it just siphons off value from all existing stock
wait what?
- edmundsauto 7y agoIt doesn't cost cash, I think they meant.
- MiroF 7y agoYeah, sorry it was unclear but I was more confused by the "siphoning" value part.
- edmundsauto 7y ago"Dilutes" stock value (per share) would possibly be more accurate? Keep throwing shares at execs; if the company is successfully, it's a dilution. If it fails, then at least they didn't waste real money.
- zifnab06 7y agoLet’s say I have 1000 outstanding shares all worth $10. I need to pay someone a $5000 bonus. I’ll just issue 500 shares of stock to them instead because, well, that’s about $5000. Hypothetically the per share price goes down by 1/3 here and is now worth $6.67 (but the company’s still worth $10,000 total it’s just 1500 * $6.67 instead of $1000 * $10). Generally though bonuses like this come out of a pool that’s already been allocated years ago and there’s no change to stock price
- richardwhiuk 7y agoEven if the pool is allocated years ago, it's still effectively dilution (as before shareholders effectively owned a fraction of the unallocated sharepool).
- three_seagrass 7y agoCreating new shares dilutes the existing share value. Paying employees in shares means you're diluting the stock value every time. Of course, for most publicly traded companies there are so many outstanding shares that this is negligible.
- MiroF 7y agoI thought most executive compensation was paid out of pre-allocated shares.
- three_seagrass 6y agoMost employees are not executives.
- MiroF 6y agoIf you scroll up, the question was "Aren't executives mostly paid in stock and bonus?"