Nvidia turns water into wine
Converts stock options into stock
Updated Nvidia is to take a charge of up to $66m to cover the cost of converting underwater - i.e. worthless -employee stock options into stock. If all the option holders take up the offer - and they would be as daft as a brush not to accept free shares - 20.6 million stock options will be cancelled and 4.8 million new shares will be issued.
According to Nvidia, the offer is "designed to help the Company retain employees and better align their interests with stockholders". Say that again? Existing shareholders will see their stake in the company diluted by there per cent - how are their interests aligned?
And why is it so difficult to retain Nvidia employees, in a time of recession. There aren't exactly many computer hardware companies hiring . And in the graphics chips business, there is no competition left to speak off - except ATI, which is based thousands of miles away, in a country which has ferocious winters, and which pays its staff less - up to a third less - than Californian Nvidia.
So when Nvidia is talking of "employees" it really means a few senior managers who we guess are holding the vast majority of shares options (the CEO, CFO and board of directors are excluded from the deal, the company says in a press release).But is senior managerial talent so hard to find in Californa, right now. And are they really so unmotivated that they need such a sweetener to keep them at the company and get motivated again. Doesn't really sound like the sort of people one would want to keep, does it? ®