Blinkx – Options Grant, Knickers, twist

PUBLISHED: 17 Mar 2013 @ 08:53 | Comments (0) | More info about Tom Winnifrith

I note an announcement the other day that Blinkx (LSE:BLNX) had granted yet another 1.5 million share options to its senior execs. The subject of executive share options always seems to cause some folks to get their knickers in a twist. I am not so sure.

Firstly 1.5 million shares is a lot of shares but it is – in context – just 0.4% of the current issued share capital. So the “dilution” if they are all exercised is not that great. And this is not free shares, the two executives gaining the options would have to pony up hard cash at the prevailing mid-price now (83.5p) if they wanted to exercise. One assumes therefore that they would only exercise if the shares were at a big premium to 83.5p so current shareholders would not grumble.

Do options really incentivise management to deliver that much more effectively? I am not so sure. Personally I’d rather see options granted at a premium to the current share price – that would align shareholder and management interests 100%.

The obscene options packages you sometimes find are where management has pre an IPO awarded itself vast numbers of options which may be dilutive at a pre IPO price. That is a no win for shareholders, pure dilution package. In this case I do not take it as a negative for Blinkx at all.

My current take on Blinkx can be found HERE

Libertarian and Euro sceptic Tom Winnifrith writes for 10 US and UK websites on shares, economics and politics and you can find links to all of his work at www.TomWinnifrith.com – you can also follow him on twitter @tomwinnifrith

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