It's a bonus plan. Period. Show me another company with a fat bonus plan, and a fat options plan. One or the other. Or good balance in both. No need to be gluttonous at the shareholder's expense.
I have to vehemently disagree with this statement "there is no logic to your assertion that employees don't have incentives that ultimately help the stock price."
So, it's OK to issue 100%, 200%, 300% options on shares outstanding? Why not, it provides more incentive ? Right ?
Following your logic, Warren Buffet should be on welfare. Warren Buffett's companies striclty adhere to the 5 to 7% rule when it comes to options. Are you suggesting that the employees of Buffett's organizations are that much LESS motiviated to produce superior returns? If so, how then is it possible that Warren Buffett has become one of the richest men in the world via his capital alloctaion skills? Could it be possible that the companies in which he invests have employees who are not as motivated ? No.
There is a point at which issuing more options does absolutely nothing in terms of overall employee motivation. Beyond that point, it just becomes a plain transfer of wealth from shareholder to employee. It takes returns that should be paid to the shareholder and puts it into the pockets of the employees, at no added benefit to the stock or the stockholders.
If Warren Buffett has become a Billionaire 30 times over through investments in companies with motivated employees having options of no more than 5 to 7% of the shares outstanding, well I'd say that's a good sign that 5 to 7% is the point beyond which options become gluttonous and just plain theft.
And 20% is 3x Buffett's going rate. That's why RHT will never produce superior returns over the long term. That's why this stock is stuck in the mud now. That's why this company needs to be a private company.