Goodman: You call insiders selling 4%, 6%, and a cashless option excercise by Gold to be selling "a lot of shares" ? Shame on you. THAT IS NOTHING!
Moro and Wittenberg each sold a paltry amount of shares -- that is indisputable fact (6% and 4%, respectively). Gold is the only insider who you can make an argument that he sold "a lot of shares." So right away the statement that "insiders" sold a lot of shares is patently false. ONE insider arguably sold a lot of shares, but by making that statement you are revealing yourself as totally ignorant of corporate stock options and the tax consequences associated with them. There's nothing wrong with that, but you better pull up a chair and understand this before spewing garbage commentary.
Dr. Gold is a professor in a socialist country. I don't care how acclaimed he is, I can assure you he makes only a few hundred grand a year at most and pays an astronomically high tax rate on top of it. Most likely the figure is $250k or under, which would mean his net income would be well under $150k/year. And that is very optimistic. Yet, this guy would have had to pay over $100k in taxes by June if he excercised the options and just held the shares he received from the exercise, as opposed to exercising them and selling.
Not only would he have been liable for a huge tax burden of over $100k (with Canada's current tax rate)...he would not have any offsetting income to pay that burden.
Let me make it simple for you...Gold had two choices with two very different consequences:
CHOICE 1: Excercise his options and hold onto the stock (ie not sell it immediately)
CONSEQUENCE 1: Canadian tax were due in June, so he would have had about 2 months to come up with over $100k to pay to the government (average excercise was around $1.50, strike was basically 0, 150k options traded, and cg tax rate at 50%...do the math). Unfortunately, though, he wouldn't be receiving any income on the trade because he would simply be holding the stock -- and a risky stock at that. So Gold would have had to tap into his personal savings to pay the taxes. If you think professors have that kind of expendable money on hand you're kidding yourself buddy. Moreover, academics are a notoriously risk adverse bunch.
CHOICE 2: Exercise his options and sell immediately...also known as a "cashless excercise" (this is what Dr. Gold actually did)
CONSEQUENCE 2: His tax liability would be covered by the income immediately received from the cash excercise. So he would actually be making money on the transaction as opposed to losing over $100k on the spot.
You're welcome...oh creature from the depths of who knows where.
DISCLAIMER: NEVER ASSUME INFO ON MESSAGE BOARDS TO BE ACCURATE. ALWAYS DO YOUR OWN DUE DILIGENCE. DON'T BUY STOCK BASED ON THIS POST OR ANY OTHER POST. I OWN A LONG POSITION IN THIS STOCK AND THEREFORE I AM BIASED.
