sectors

What are your options?

Date: February 3rd
Author: Kate Metcalfe

What do a graffiti artist, the Winklevoss twins and about 3000 employees have in common? The answer…They are all set to become multi multimillionaires in May.

Why? Because they own share options in the internet phenomenon that is Facebook, who plans to raise $5billion by launching an initial public offering of stock in the Spring. In the early days the Company issued options to employees in an effort to create incentives but also simply because cashflow was low.  For many this will bear a strong similarity to 2004 when Google went to market with its $1.67 billion IPO. This saw secretaries, a company masseuse and a company chef all become millionaires.

Share options give the holder the right to buy or sell shares in a given company at a previously set price regardless of the current market rate. As soon as Facebook is listed those holding stock options will be able to buy stock at the previously agreed price and then sell them immediately at the market rate. (Then buy a yacht and spend the rest of their days floating around the Caribbean!).

It is clear why employees benefit from stock options but what are the advantages for employers? By issuing stock options a company is able to: make their employees feel like part of the business and therefore more involved with the growth and performance; employ individuals who may be financially out of their reach but who will help the company improve; (and for start up companies specifically) preserve cashflow when money is tight.

If you would like some advice on stock options and other ways of helping your company’s money stretch further then please contact the Corporate and Commercial Department at Myer Lister Price on 0845 0738 445 or info@mlpsolicitors.co.uk



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