SLTD $$$$ 9. Why do officers and directors occasionally sell some of their shares of the company's stock?
As disclosed in our public filings, some of our officers and directors receive equity rewards based on performance. These rewards include restricted stock grants and incentive stock options. Specific details of these incentive plans, including performance goals, vesting schedules and conversion requirements are disclosed in documents filed with the Securities and Exchange Commission (SEC). Further, trading of the company's common stock by officers and directors is governed by certain SEC rules.
In most cases, receipt of vested shares is a taxable event. In order to pay income taxes and other expenses, holders must often sell shares in the open market. Shares may be sold according to a broker managed 10b-5 selling plan. Once the plan is in place, a broker periodically sells shares, according to certain formula and guidelines in the plan, including possible impact on market prices. This removes the stockholder from the stock trading decision-making process and eliminates potential conflicts arising from the holder's knowledge of inside information.
From time to time, we may issue shares of common stock to acquire other companies. As a result, members of an acquired company's management team may receive shares of Solar3D common stock, which may constitute a taxable event for the holders. Some or all of these shares may be sold in the open market, and may be subject to a 10b-5 selling plan disclosed in public filings.
Our Board of Directors believes that it is in the best interest of our shareholders to provide equity incentives to key members of the management team, some of whom may be working full time at less than market rates. Even though equity incentives represent dilution for current shareholders, the Board believes that equity incentives help align the interests of management with the interests of our shareholders.
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