Biotech Values

[iwfal]

Of course I wouldn't expect most execs to understand this anyhow, so likely it still is a bullish signal. :)

FWIW if you assume that they have to sell off some of the assets and that the income bracket is 40 percent vs 20 percent for LTCG then it is always better to not exercise if you think the stock is going to go up. Because the appreciation you get to keep on the stock you would have sold for tax reasons more than offsets the lower tax rate.

Or, think of it another way... If you keep the stock the total number of shares you had to use to pay taxes was 40% of your holdings. But if you exercise early you end up paying that AND some more.

Obviously it ends up a lot more complex if you are willing to pays taxes out a of different bucket. E.g. Something like this happens when you transfer traditional IRA to Roth IRA and pay the taxes out of ordinary income.

And you are correct we discussed this perhaps 2 years ago. And it is still surprising to me that presumably intelligent execs are clearly doing what Dew proposes. Taxes just make people irrational. E.g. People often act to minimize taxes even when that hurts their own income.