So three million shares at $21.46 are worthless? Can somebody explain that to me? Please!
The shares are only worth something if the price of the stock rises above $21.46. If you received an option to buy three million shares at $21.46 in Citi two years ago, it was a pretty good deal — the stock was trading at $50+. A nifty profit. The same deal today, with the stock at $5.00 is a joke.
He has the right, but not the obligation, to buy 3 million shared at $29.51.
Since the stock is currently trading for 21 and change, this right is of no value at the moment. But if the stock went up to 40, it would be very valuable indeed.
Yes, the shares are worthless because they are lower than what they were when his options were priced. Stock options get priced at a certain time, and at the time Iger got the options, the stock was in the high 20s range (that would be his cost basis). NOw, when you get options, you normally have to wait years till they all vest, a certain percentage vests every year.
Once the options vest, the only way you can actually sell is when the market price is higher than what the options priced at. So Iger’s options priced at $29 plus, with the stock price at $21 plus, there’s no money to be made.
Gotta love that gotcha headline, I was ready to have a fit until I read the rest of the article and realized that $51 million depends on the stock price going up more than what the options priced at. Moreover, the guy did not take a bonus, now if AP wanted to be nice, they would have had a headline that said “Disney CEO turns down bonus).
Ah, yes, the media, don’t you just love how deceptive they try to be?
He has the option of buying the shares at the grant price of $29.51 when they vest. Since the grant price is about $5 below the market price, the options are of no value since he could buy them on the open market for less.