Why Cecil buying all these shares really means something!
Contrary to some posters, the actual facts on why executives invest in the company they run are well documented, and are available with many sites online.
In contrast to outside investors, company executives cannot trade or sell their options,
and are also forbidden from hedging the risks by short-selling company stock.
In addition, while outside investors tend to be well-diversified (holding small amounts of stock in a large
number of companies), company executives are inherently undiversified, with their physical
as well as human capital invested disproportionately in their company.
For these reasons,company executives will generally place a much lower value on company stock options than would outside investors.
Ignoring complications related to early exercise, potential forfeiture, and executive
inside information, option valuation formulas such as the Black-Scholes formula are appropriate for measuring the amount outside investors would pay for an option. This formula can be seen on nber-org site and may help certain parties understand the how-and-whys of this type of option.
However, the value of a non-tradable option to a risk-averse executive is more appropriately measured
by the amount of riskiess cash compensation the executive would exchange for the option.
Essentially what some posters state may be a thoughtful examination of at-hand-facts but generally are not a part of the careful executive options that must be exercised in accordance with stiff SEC regulations.
Any thoughts of improper awarding of below-market stock purchases should be thought over carefully. In my opinion STWA below market purchase by it's executive is more than proper and shows a large confidence in not only it's own future but also the companies.
Again Lube comes in to try and distort like he knows something. Anyone can look up lock ups, vesting, or what those terms mean. THey can also look back and check when these deals were made (given to themselves) by the board as a part of a salary/payment/renumeration package years ago.
What Lube wants you to think is these guys are going out and buying shares.. They are not. Every year these shares become available to be purchased by them out of lock-up. Next year on the same date, the same amount will become available. IF Cecil went out and purchased shares on the open market (like insiders of OPK have been doing for months. CHeck that stock to see) then that would show confidence and that something may be up. Steve Jobs paid himself a dollar a year.. didn't mean that's all he made. He also had millions of shares given to him every year. When he bought those options it didn't show faith, it showed he was like anyone else and could buy cheaply and sell high. IF you check the filings on teh OTCBB site, you will see neither of these guys have actually bought the options that have come out of lock-up. But Lube wants to make it sound like they have. He wants you to think they cannot sell or trade them... then why have them? The guy makes no sense in his pumping. Any director of the company can sell when they want. They just have to file just like they do when they buy. Hardly makes sense anyone would buy stock/options if they couldn't sell them.. ridiculous. What Lube may be trying to say when he blathers on trying to sound like he knows something is there is an escrow period for options (not stocks bought on open market, just filing requirement which means you cannot sell on a whim at any second, but hardly a long period). Options that are vested as part of a slaray or compensation package on the excercise date are out of hold. This can be easily checked on if anyone wished to read up. If you look at the value on the 2 forms, it is "0" meaning they did not buy any.
Lube also blathers on about "stiff SEC regulations".. this is the OTCBB! lol! But again the main point is he is trying to sound technical and deflect. These options are part of an employment/renumeration package. They could have priced them at 1c. There are no formula requirements for pricing these types of options. The board can do what they want, and if shareholders don't like it, can go after the board. This is how it is supposed to work is management rapes a company. Cecil and his buddy were pretty well the only ones on the board at that time so there wasn't anyone to say anything else when they priced the shares. The new board member gets 5k/month. You wouldn't say yes for the same deal? Bigger gave himself a raise (when the company is going broke), to $240,000 per year. This year he can buy 500,000 options. At the current spread, that is another $375,000 in renumeration for a total yearly of $615,000. What shareholder value has this guy produced? What equity has he brought to the company? (This can be checked on their filings.. it's the number with a big negative sign next to it.) Next year bigger gets another raise and gets 1,000,000 options. At current spread, he makes $990,000/year while company goes bankrupt. WOnder why they want to keep this afloat hey? 'Ol Cecil last quarter issued himself a $100,000 "bonus" (again, while company goes bankrupt). He does nto collect a salary, but the forgone salary IS LISTED as owing to himself. Cecil got 3,520,000 options as part of his renumeration. At current spread he is basically making $2,640,000 per year. And Lube wonders why anyone would want to keep this going if it was a scam. Is Cecil producing shareholder value to legitimize that sort of a package? No. THe company is going under, while he continues to post vague news releases that never have anything they can be held to.. NDA's.. coulda shoulda.. one day....some company in another country you will never be able to research..