In March 2006, my company rewarded its employees for achieving an enterprise financial milestone by offering a company stock bonus, designed to vest on March 14, 2009. The vesting period was perhaps designed to create an incentive for employees to stay with the company. When the bonus was announced, the stock grant was worth about $2,000. At the high point last year, the value of the package approached $3,000.
If the bonus were to vest today, each employee would receive the same amount of shares, but the value would only be about $300. The value of a share of my company’s stock has declined 90% from the high. To reclaim that high, the price would need to increase by 818%. That would be 5% a year for 30 years or 3% a year for 75 years. It’s probably safe to say it will be a long time before we see last year’s prices again, if ever.
I don’t see this price changing much for the better within the next week before the grant vests. I suppose I should be happy that I still have a job, although I’m considering leaving to work for myself full-time, and I should appreciate receiving this bonus in the first place.
Management says that our company’s stock price is sympathetic to the rest of the industry and the decline is not due to internal factors.
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{ 6 comments… read them below or add one }
Ouch. :(
That is painful to read. I’d say the company should issue new incentives at the lower price, but because of the economy there are very few people dumb enough to jump ship and chase another job.
Flexo is an exception of course, because the income is already there.
Major burn though.
“The value of a share of my company’s stock has declined 90% from the high. To reclaim that high, the price would need to increase by 818%. That would be 5% a year for 30 years or 3% a year for 75 years. It’s probably safe to say it will be a long time before we see last year’s prices again, if ever.”
Ugh, you just wrecked my weekend. I was fooling myself into believing that it would come back eventually.
Take it from me, take the money and run.
Exercise your options and sell immediately. Since undoubtedly these are “non-qual”-type options, you will be taxed at the end of the year as regular income. You’ll need to save a good chuck of it to pay taxes. That’s why you need to sell now. If the stock goes down between the time you exercise and the time you sell, you are liable for the taxes on the exercise price, even if you hadnt even sold yet.
Of course you could take a risk and do nothing for a while. Or even more risky is to exercise but not sell.
Talk to some professionals.
I feel your pain. When I started my company they were doing a “stock” program (not real stock…we’re a private company) where employees got an amount of points based on their performance. They gave out ‘points’ for a few years and then stopped it. They started vesting after 5 years. At the high point I think the value for me was somewhere around $30,000. I opted to not take the payout … I’ve always thought I’d be with this company until I retire in 30 years (it’s that kind of company…LOTS of associates there after 25-30 years).
The value today?
$0.
That’s right. Absolutely zero. It has nothing to do with the company’s “value” (not monetary value) but with the market and our loss of assets.
They had implemented a mandatory buyback process starting in 07 – requiring at least 11% of our “stock” to be paid back in a bonus. They suspended it this year. Thankfully.
I’ll be happy if the value goes back to $5 a point…that’s what it was when I first started getting them awarded.
It’s not really like I’ve “lost” anything. After all I never had the money in hand. And it was a bonus. It’s not tied to my compensation or anything. But I really did enjoy those first few years of extra bonus during the year (the highest I got was over $1000).
I know it’ll all turn around someday but it sure is painful right now.
I don’t even want to talk about stock awards with companies. Mine changed and it’s really screwing me out of total shares. I’ve lost half of what I should be getting.