If he received 1.5 million shares at 0.12/share, he received basically $180,000.00 in compensation and must pay taxes on that compensation now. He'll pay taxes on appreciation (or take a tax loss) when he sells them.
SIRIUS XM SATELLITE RADIO FORUM
If he received 1.5 million shares at 0.12/share, he received basically $180,000.00 in compensation and must pay taxes on that compensation now. He'll pay taxes on appreciation (or take a tax loss) when he sells them.
yes, but the million dollar question is this./..Originally Posted by bananaz
The SEC filing said it MAY have been for taxes occuring on the excercise of options. Does this then mean all these directors choosing now to excersice options means they think the stock has bottomed? And where is the SEC filing for the activation of the options? Would this come later? Or were these options already executed, or shares already given?
Still confused. What I dont get is, how can you pay taxes on excercising a stock option you havent excercised yet? And if they did, where is this filing?
Sorry but I can't answer that question because I don't know why they were given the options in the first place. This may have been the earliest that any of them could have exercised them or they or Sirius may have needed to acheive certain goals to be able to exercise them. If they received the stock then they must have exercised options.
Does anyone out there know?
The additional shares issued will dilute the existing pool but not by much. The stock went up today in a down day so I don't think that the dilution was an issue.
Last edited by bananaz; 02-23-2009 at 08:46 PM. Reason: addition
The positive thing I got from reading each of the reports is the number of common shares each one of them still owns: from approx. 500,000 to well over a million.
It is in their own best interest to do what is best for the shareholders, namely themselves. This makes me believe that Mel took the best deal.
Standard Operating Procedure.
This has been an annual event that has been debated for years -- not just with Sirius.
What happens is that managment and the BOD (and other employees) are granted stock grants that vest over a period of time (usually 1 to 3 years). When they vest, it is considered a "taxable event" and the value of the shares at the time of vesting is considered "earned income". So many companies offer a cashless exercise type of option where they will withhold a number of the vesting shares to cover the State and Federal taxes and brokerage fees incurred by the vesting shares.
Critics will say that if the officer truly believed in the company -- then they would just pay the taxes out of pocket and not sell the shares; others say, get in touch with reality... why pay with cash when you can pay by selling vested shares?
Regardless, it's really a non-event -- always has been.
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lol homer it doesnt matter relmor is hell bent on being worried about this
Here's an example of the math... let's say Officer A received a stock grant for 1 million shares on February 20, 2006, back when the stock price was $3.75 -- and the shares fully vest in 3 years.
Jump ahead 3 years to February 20, 2009 -- the 1 million shares now vest fully... but the stock price is at $0.13. Well the earlier grant price of $3.75 is irrelevant. What is relevant is the closing price of the stock on the day the shares vested, which was $0.13. That means the 1 million shares vested at $0.13 and are valued at $130,000. This $130,000 is EARNED INCOME to Officer A. They now owe state and federal taxes on this $130,000... so they typically withhold (sell) enough of the vested shares to cover the taxes and the brokerage fees.
The remaining shares are now fully owned by Officer A, with a cost basis of $0.13. If he holds for the 1 year period, then the holdings will become LT holdings and taxed at 15%. If he sells before then, then it is ST and taxed at his earned income rate. When the employee does sell, taxes will be owed on the amounts from $0.13 to whatever the price the shares were sold at.
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Trippin -- Relmore is confusing Stock Options and Restricted Stock Grants -- which there is a world of difference. Most companies are getting away from stock options these days, in favor of Stock Grants. Mostly because all stock grants must be expensed now, thanks to changes in financing rules.
Stock options don't become a taxable event on their own -- they have to be exercised. Restricted stock grants however, are a taxable event when the shares vest. Regardless of what the employee does. The taxes are owed, based on the price of the stock on the day the shares vested. That can either be paid in cash out of pocket or by withholding shares. Most times you'll see them do a share withholding.
My company has given me both, Options and Restricted Shares -- actually, now that I think about it -- I have a batch of restricted shares vesting next month. That will be a taxable event for me, as it will be earned income. Should I pay out of pocket or via a share withholding???
ANSWER: I'm not putting any more money into this market at the current time.
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why the hell would u pay out of pocket, u like spending money pointlessly?
btw thx for breaking it down, although i dont know all the in's and out's it was quite obvious overall what was going on.
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