RE:Lifestyle BuisinessRickkie wrote: Don't remember who, but someone on this board several months ago suggested this was a "lifestyle business".
According to Wikipedia, a Lifestyle business "is a business set up and run by its founders primarily with the aim of sustaining a particular level of income and no more; or to provide a foundation from which to enjoy a particular lifestyle"
Could it really be? If so, I guess it's OK with the regulators?
R
I remember that. I challenged that at the time and still would.
Any given Mgt team doesn't go through all the trouble of enriching themselves with options and warrants (no money down) with the expectation that they will eventually all expire worthless.
While a handsome T4 salary can be a nice (maybe even sufficent from the POV of the average Joe).... if you want to get really rich, you do it with options, acquired at the most opportune times, and at the same time, secure a favourable tax treatment (e.g Cap Gains at 1/2 inclusion rate). That implies that there is an expecation, at some point, that the share price eventually rises - so you can "cash in"..
The ugly part occurs when options are awarded despite non-performance, at ridiculously low strike prices....particularly in light of a fiduciary duty to enhance value for ALL shareholders. Or when finnacings become warrant distributions (to F&F) and or are disguised as "a necessary or prudent financing", or when done at artificially low prices, with little or no marketing support, all while the "market" sets the price.
The BOD has a responsibiltiy to oversee Mgt, to see that financings (and its dilutive effects) are done in the interests of, and for the benefit of, ALL shareholders.
Then there is the moral responsibiity to dance with the ones that brung you...not to fleece them over time.
MM