Assume for a minute: I'm a CEO at "Company" XYZ, MKT CAP $1 BB. So far, my input to the board of directors and the company directly has helped improve the company greatly. I reckon that, going forward, my ideas/direction can turn the company into a firm worth 2 Billion Dollars (i.e. double it's value). However, I want to profit substantially off of this, if I am able to double the firms profits. Here's my current plan on how I might profit: 1, First, I would purchase long-term call options (from "Company XYZ"). These would be considered exotic options. I would purchase (with the help of a "Lender ABC") 25 million dollars worth of these options from Company XYZ. Then comes the hard part- I double the companies value through my ideas and direction. Then, once the stock options are worth exponentially more, I sell them back to the company, or an outside source, after paying back lender ABC, say $50MM. My questions to you all: 1. Would it be feasible to obtain a lender to help me buy the $25 million worth of exotic call options in such a scenario? 2. Assuming the company's board of director's believed I could double the company's value, would company XYZ likely sell $25 million worth of exotic options to me? Would they be able to sell exotic options to an employee? 3. Has anything like this every been done? Has a key employee of a corporation ever had so much faith in their ability to turn a company around, that they PURCHASED stock options from their employer? Can it be done?
Execs usually already have so much skin in the game from their own stock options given to them that they don't need to do it. One way to get around it is to have someone else buy the options and you stay w/ the company if you're not allowed to buy them directly. However you run the real risk of this person pulling a shawshank and disappearing with your money
1. Yes. A private bank will lend you the money if you post collateral (like a 75MM art collection). 2. They do this all the time. They are called employee stock options. Often they are granted (given to you for free). 3. All the time. Virtually every executive and mid level employee is given stock options.
This calls for a special option pricing model, in which hypothetical call option values are greatly influenced by the following input: *Are you (the CEO) boinking your secretary? Y/N
your plan can't legally be to double the stock if in long term its not for the betterment of the company. i am sure you totally know that part though.