Allegations over improper options practices — with backdating taking center stage — have been in the press so much this year one would be tempted to conclude that there is no drama left on the subject. That temptation, it turns out, would be daft.
Yesterday Lawrence Joseph Ellison, chief executive of Redmond-based software maker, Oracle, earned a massive amount of money upon exercising his options. According to the SEC filing, he exercised options for 1 million common shares, at $4.18 each, and sold them at $20.42 later that day. Of course, this was all legal.
The ability to earn such an enormous profit was in part due to his use of a 10b5-1 trading plan, which allows an employee to set up their own program in advance.
This privilege enables executives to sell options at a broader range of times that could potentially yield better results. Certainly a juicy quagmire. For more insight into the subject, check out Erik Sherman’s piece on 10b5-1 plans and insider trading in the December issue of Corporate Secretary.
Corporate Secretary magazine