You hear a lot about CEOs making scandalous bonuses in stock but I was under the impression that they can’t sell massive quantities of stock all at once otherwise the price might drop. I also hear they can get loans using stock as collateral but don’t those loans need to be paid back? Also, apparently hardly anyone pays dividends anymore. Does this money “exist”? Can they purchase stuff worth millions of dollars? Or are they actually cash poor?
In: Economics
When I started at my current company part of the benefit package was a series of “stock options” that granted me the right to buy company stock on or before a future date at a specific price.
If the stock were to rocket to $200/share, I could still exercise the options for $13 and effectively pocket the difference.
Yes a CEO can’t liquidate an enormous stock position in one day, but that’s true for every wealth person. They all keep their money in stocks, not Scrooge McDuck vaults – it’s only sold as needed to fund other activities or move to better investments.
They have vast collateral to keep cheap lines of credit open, but they can certainly be cash poor.
Latest Answers