You are right, they don't HAVE to. It is there to choice to spend money buying the stock (remember, options give the right to buy, they don't give the stock). So an exec can go to their piggy bank, and buy stock, and hold paper. Or then can cash it in and receive compensation. It is clearly their choice which they do, nothing forces them to buy, hold, or sell.
< why do you fault them for selling some stock to make cash >
When did I fault them?
I was countering the argument that the executives HAD to exercise and sell. Over the years, some posters on this board state as a fact that execs HAD to sell - that's just flat out wrong.
I was not arguing that the execs should or should not exercise and hold. That's a personal decision each exec has to make. But (and it's a big but), execs don't HAVE to exercise and sell.
Yes, they could execute and hold, you are correct. But any good investor wants a balanced portfolio, and if Corning execs just kept holding Corning stock, that would be against all investment guidelines. They have their salary tied to Corning, their benefits tied to Corning, unexercisable stock shares tied to Corning - why do you fault them for selling some stock to make cash - the alternative would be to give them big cash bonuses, then no one could complain about insider selling because they wouldn't have stock options to sell. But by giving options that can't be exercised for 1-3 years, they have incentive to make the stock price go up, and don't get a penny if it goes down. It's just part of their salary package.
Everytime I see your point made, I want to remind others that the execs don't have to exercise and sell when their options are about to expire (usually at ten years and one day). They could, instead, exercise and hold especially if they believe the price is going up.
I'm not sure I buy into the tax purpose reason. These option exercises along with their incomes already place them into the highest tax bracket. So, I'm not sure how selling their options one year helps them tax-wise year to year.
IMO, the company places a large portion of total comp in stock options and the execs are exercising and selling for annual income purposes. If they believe that the price was going to shoot up bigtime in the near term, they'd exercise and hold. Otherwise they are merely keeping their income at consistent levels. JMHO, of course, as each exec probably has his/her own personal reasons.
I love it when people react to executives selling shares. A great deal of their compensation is based upon performance and they are rewarded in stock options. They have specific “windows” in which they can sell these options to avoid any sign of insider information conflicts. Most of these guys have their stock options preprogrammed and they sell automatically. Stop worrying about what they do with their finances but base any of your concerns around how the company is performing.
I agree that salary and bonuses should be tied to performance. Absolutely the way capitalism is supposed to work. When B or D's give contracts which reward failure in untold millions of dollars, then there appears to be collusion/fraud in the negotiations. Especially when the attitude of some reported board members is: Screw the common share holders", as was reported on FOX.
NO ONE should receive a bonus for failure.
Usually I don't speak up here, but these comments lately have to be the most ridiculous posts I have ever seen. Anyone who even remotely understands business/executive comp would know what is going on here......Let's see, why would and executive whose comp is largely based on stock sell some in January/February????? Perhaps Tax Purposes.....lol..... Bunch of freakin amateur bashers.
They are dumping big time now. They know there's a double dip coming.
Now they have to invest in China to chase glass sales over there. It's an endless process when price is falling. A bad investment.