Biotech Values

[DewDiligence]

PFE—Michael Dolston’s transaction is noteworthy because he prematurely assumed the risk of holding $14.1M worth of new PFE shares. (“Prematurely” because the SARs in question did not expire until 2024). The only reason an executive would do this is a very high degree of confidence that the share price will go up between now and the expiration date two years from now.

If the share price does in fact go up during the ensuing two-year period, exercising the SARs prematurely produces a dual tax benefit: a smaller proportion of the gain is taxed as ordinary income, and the one-year clock for long-term treatment of capital gains starts sooner.

[Dolston] turned over 59k shares to cover the taxes so his cost is zip.

The Form 4 posted in #msg-168092123 does not indicate that. I think you’re confused by the fact that the number of acquired shares (102,460) is smaller than the number of exercised SARs (286,005). The arithmetic is explained in footnotes 1 and 2 of the Form 4.