AMD is looking for its own bailout on worthless assets, too.
Like most tech companies, AMD likes to pay its people with stock options. Unlike most tech companies, practically all the stock options they’ve issued aren’t worth the electrons they’re printed on. AMD itself says that 99% of its options are currently worthless. If you’re an AMD employee and you got options a couple of years ago to buy AMD shares at, say, $16 rather than extra pay, that doesn’t mean a whole lot when you and everyone else in the world have the option to buy AMD shares for about $2.50. So AMD wants to reprice its options (i.e. so you could buy AMD shares for something more like $0). They are required to get stockholder approval to do this. Since AMD shareholders haven’t exactly been throwing excess cash from their investment into the trash the last few years, and this move would put even further downward pressure on the stock price, this shareholder meeting could get very exciting.
It’s not just AMD, many other tech companies are faced with the same problem. AMD says it needs to do this or else key employees will leave.
(I have a simple question, given the current environment, just where are they going to go?)
While an argument can be made for making some limited adjustments in certain situations for certain companies (i.e., it’s not like Intel’s stock price dropped by about half because they didn’t execute properly), AMD’s stock price had gone most of the way down the toilet because of AMD’s homegrown fiscal crisis, not any general stock market panic. The latter just flushed the bowl an extra time.
AMD execs and directors are already getting new stock options priced at $0. If such a repricing on older options was done across the board, the biggest beneficiary of this would be Hector Ruiz, and essentially reward him for AMD’s fiscal failures. If that isn’t rewarding failure, I don’t know what is.
The devil is in the details, but if this turns out to be mostly a bailout for the AMD execs, if AMD shareholders are ever going to say “No” to anything, they’ll say “No” to this.