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Dense-Pac Microsystems (DPAC) Message Board

  • ttroubleahed ttroubleahed Jul 6, 2001 10:41 AM Flag

    Do the math--and you will

    understand why 2,000,000 more options is ridiculous.

    DPAC has about 1,100,000 avaiable options to give out, without getting anymore.

    If DPAC hires 50 more GREAT engineers, clearly more than they can, but for argument, lets say they do. And they offer them all 5,000 options, a lot in today's world, that would use only 250,000--leaving almost 900,000 more.

    Even if you doubled that to 10,000--which in today's market is huge--just ask anyone in the tech sector, it would still leave a large amount left.

    I totally agree that the engineers and managers deserve options--it gives them incentive to grow DPAC. What I don't want is senior management getting shares----they should buy them like we have.

    Do the math--learn how many people work for DPAC and how many of them are eligible for options. You will see they have more than enough today.

    What you will learn is there is enough in the pool today to satisfy giving them all lots more, and not diluting our holdings.

    I am very concerned this management team will line their pockets with options, at our cost, including the Directors, and then watch how our value drops.

    I support everyone's concern about the engineers. clearly there are enough options avaiable to make them happy.

    You will all learn the hard way what happnes once they get this exhuberant amount.

    And by the way--the percentage calcualtion used on Wall Street uses all the options previously given, the options that are still avaiable, and anymore approved by vote.

    DPAC will be off the chart at almost 30%---a huge negative to money managers.

    But you will learn the hard way----the value of your stock will get effected negatively.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • trouble,
      In your arguments, you have not considered the fact that unless the price of the stock goes up, any and all awarded options are effectively worthless.

      It simply doesn't matter how many options are awarded. If the stock price doesn't increase, there is no incentive for employees to exercise.

      Stock purchase options which are not exercised result in no stock being issued. No issues, means no dilution.

      Awarding options on the other hand, provides a strong incentive for things like innovation, cost control, and extra effort. These factors are what ultimately drive the earnings, and by extension, the market value of a stock.

      Yes, 2,000,000 more shares sounds like a lot. But, what time frame are we talking about for these shares to actually be issued? It depends, I believe, for the most part on how quickly the company grows.

      Practically speaking, I would guess that this would be spread out over the next five to eight years. 71% of the previous reserve of 4,000,000 shares has been issued since 1996.

      If they are successful, DPAC could easily double or triple the number of employees over the next five years. I hope that this happens and I want DPACs managment team to have the tools for hiring, motivating, and retaining the best people.

      • 2 Replies to m_workin_on_it
      • response--is you are saying the dilution only occurs if the stock goes up---guess what--it better go up--or sell the company.

        Saying there is no dilituion if the stock does not go up--well---I don't need to criticize you--it just has no merit to what you wrote..."It simply doesn't matter how many options are awarded. If the stock price doesn't increase, there is no incentive for employees to exercise"

        Also--if the company turns things around---and eventually needs more options after they prove the growth can actually occur--i would be the first in line to support management. They have more than enough options now for any short term (1-2 years) growth. Just do the math.

        I can not support more options now--considering how many they have left to offer. It just does not makes sense--and is not right. You will not find another tech company doing this--as such a significant amount.

        I also would like to see the management buy shares to build their position. The low level of insider ownership is bad for investors. Let them put their money to work as we investors have.

        I say--wait for the turn around---and not ask for more options now. 14% MORE dilution is wrong--VOTE NO!! They have enough options in the kitty right now.

      • That is a very good point. It puts to rest the debate in my opinion. If the price of DPAC goes up, and this person, or persons still is trying to work over this point, it will be rather obvious what they are seeking to do. Appreciate your comments regarding options, have learned alot.



    • An "exhuberant" amount of options. It should be trouble behind, mainly 4th and 5th grade during spelling and grammer. Actually maybe this numbskull is still in 4th grade. If thats the case I apologize, it is wonderful to see our youth get involved in the stock market.
      One good thing our obviously "troubled" young friend has done is brought out some new posters with a grasp of investing and high tech companies. Always nice to see rational people from either side of the fence express opinions.

      • 1 Reply to Fanofstan
      • I appreciate the posts knocking my spelling. Sorry-I don't take the time to correct my typing.

        But, I can only hope you spend as much time doing a proforma to understand the impact of another 2,000,000 options.

        Add the already existing 1.1M the company has--and our stock gets diluted by over 14%. Do the math--14% dilution!!

        And for all the wrong reasons.

        If the company had no options left---or a minimal amount--I could undertsand the request for 500,000 more. That would be consistant with how most companies would proceed.

        But considering they have over 1.1M, and now want to add another 2M--well--you watch what happens to DPAC.

        Now, not only do they have to grow their earnings to get respect--but they have to grow them even more to overcome the dilution just to get EPS growth. All this in a bad economic enviroment.

        But you know better Mr. Fan.

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