Employee Stock purchase

Message ID: 230867
Posted By: stats_for_all
Posted On: 2005-02-01 01:41:00
Subject: Employee Stock purchase

2000 Employee Stock Purchase Plan
is detailed in the March 2000 IPO filings 424b1 on page 60
and further described in the 2003 10K

2001 IPO at http://tinyurl.com/4thdm
2003 10K at http://tinyurl.com/3vhbn

Provisions:
1. Participants are limited to 750 shares purchased semiannually
2. Limit of 10% of earnings.
3. 125,000 shares maximum semiannually in aggregate purchase for all participants
4. 500,000 share initial reserve growing at 1% total outstanding on Jan 1st of each subsequent year
5. Board can change conditions at any time

Experience is detailed in the 2003 10-K
2001 FY -- 19,000 shares at $6.19 to $6.70
2002 FY -- 175,000 shares at $0.71 to $2.62 (period overlaps reverse split)
2003 FY -- 345,000 shares at $0.66 to $1.38

Observations:
345K shares at an average of $1.00, implies participation by individuals with a collective gross pay of>> $3MM were active in 2003. Since exercise price is set by entry date pricing (unless the price is falling), these participants would of had to commit to the purchase plan when price was low, and reserve a substantial fraction of their salary. Shows a remarkable faith and prescient knowledge of Darl's ability to raise the stock price.
Employee count was 114 sales, 75 RD and 55 General.

If the initial allocation was reverse split to 125,000K outstanding, subsequent purchases might of depleted the capital allocation even with the annual 1% reinflation of shares. (11MM outstanding in 2003 yields 110,000 new ESOP shares added)

Message ID: 230890
Posted By: jldill22
Posted On: 2005-02-01 07:33:00
Subject: Maybe Why more time may needed

In 2000, SCO (Caldera) did a revese stock split (1 new share for 4 old shares).

http://www.sec.gov/Archives/edgar/data/1102542/000091205702002085/a2068379zprer14a.txt

This should have reduced the number of shares being purchased under the 2000 Stock Purchase Plan to one quarter of the number of purchase rights previously granted. Under the stock option plan the number of shares under option should have been reduced by a factor of 4 and the option price increased by a factor of 4.

Perhaps the screw up relates to a failure to make one or more of these adjustments.

Another problem, which is applicable to any stock purchase plan, is that if the price of the issuer's stock falls during the period while the employees are still paying for their purchases, the issuer will have a serious morale problem with the employees locked into paying for stock at a price that is above market. This happened to SCO big time between 2000 and 2003. Issuers, in these circumstances, are often tempted to "push the limits" to find an out for their employees caught in this bind.

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