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  • wildpickuptruck wildpickuptruck Jan 30, 2004 10:29 AM Flag

    Wilson NC, Birthplace of BBT

    We the little stock holders are not in the same boat as executives with respect to their stock holdings. Wouldn't you like to have a non-binding 3 year option for x-thousands of shares of BBT, even at todays price of $35/share (share options are usually much less than market price) that you could take advantage of within the next 3 years when the price of BBT could be $70 or more (you are not obligated to fulfill your option) and you could get the shares at $35. example: 100,000 shares at $35, borrow $3 1/2 million, to buy the shares, sell half and you have made $1,750,000 profit or own outright 50,000 shares. I wish I could get in on deals that are available to top management.
    Little boys are around to pay the bills.

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    • Hey Wild,

      Thought you might like to know that most of the options that BBT gives to the executives are for a 10 year time frame. This information is in the annual proxy statement.

      Great point in your post, the above just gives them more time to make money on the options.

      Regards,

      Jim

    • Sorry Wild, you misfired. Options are granted at close of market price on day of issue and BB&T unlike some firms has never repriced options. The only gain execs get is difference between price at day of option grant and price on day of exercise, the same gain per share you or I would get. And options are granted as part of the pay package in lieu of cash. Board members have the choice of options instead of cash and many select options. They take market risk of options being underwater at maturity but it helps the board and mgt. think like s\h. I think it's a good strategy..others disagree.

      Fan

      • 1 Reply to BBTFan
      • Actually, BB&T grants options at a discount from the closing price, I believe either 15 or 20%. So, let's assume that JA is granted 20,000 shares at the close of business today (we'll say $37.00 for ease's sake). Assuming a 20% discount, the immediate value of these options is $148m. Nice package on top of the salary.

        If you follow this line of thinking, then practically the only guys who have made money over the past 3-4 years (not counting dividends) are the employees receiving this benefit. Seems a little unfair to the common shareholders, doesn't it?

        Also, and I'll admit I'm unsure on this, but i believe shares have a three year vesting period (1/3 per year) followed by a 5 year redeem period. Is this standard for options or is it more favorable for the option holder?

 
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