PERSONAL FINANCE 101
I got this from the PSE website: http://www.pse.com.ph/resource/memos/2012/LA__2012-0535.pdf
What does this mean?
Thanks a bunch for the help. You've been really great. :)
George
Dear George,
First, let's talk about stock options. Stock option holders have a right (but not the obligation) to buy a particular stock (the "underlying" stock) at a fixed, predetermined priced called the strike or exercise price. If the market price of the underlying is greater than the strike price, then the option holder benefits from exercising the option since he or she is able to buy the stock at a lower price; if the market price is less than the strike price, then the option is worthless. Stock options are thus widely used as additional compensation for management since it provides motivation to make decisions that may increase the stock price.
Now this is how I understand the disclosure.
In 2003, Jollibee filed for around 100 million additional shares to cover stock options that it provides senior management. Shares won't be considered issued and outstanding until the options are exercised. It seems that recently some of these options were exercised, resulting in 21,633 additional shares outstanding. JFC investors would be affected since the additional shares will dilute their ownership, albeit only marginally since 21,633 is a drop in the bucket compared to JFC's 1 billion shares currently outstanding.
