Stock Option Magic

What is the biggest change in Bentonville since Sam passed away in 1992, was a question that I asked to several people there during my talk and visit. To a person they all mentioned how there is more of a show of wealth, with new mansions being built, expensive cars purchased and other expenditures. “Sam would have never wanted that,” was told me by several.

And, if you look at the numbers you can understand how Wal-Mart has brought so much wealth to the small town. Sam was notorious for paying low wages but freely giving stock options to virtually everyone. The associates bought into the plan and hundreds, if not thousands reaped the rewards.

If you had bought stock in Wal-Mart at the time of their IPO in 1971 and held it to today, you would be a very wealthy individual. A $1000 investment would have purchased slightly over 60 shares. In the next 34 years the stock has split two-for-one eleven different times, which would have resulted in approximately 124,000 shares, worth $6 million.

I was told of former Wal-Mart employees who cashed in their stock options to buy houses, cars, etc. The most interesting was a fellow who bought a riding lawn mower with his options. He still has the riding lawn mower, but kicks himself today as the stock would be worth several million dollars. That is an expensive lawnmower!