A quick look at the record doesn't convince me that Myers isn't as loyal to his company as Gates and Dell. As of 2/96, Myers directly owned 229,297 shares of RSYS. As of 1/7/98 (when he transferred 1,500 shares), he still directly owned 221,444 shares. About half of the approximately 8,000 shares he divested over the 2-year period were not open market sales and appear to be gifts made to family members (or trusts for their benefit). As such, the transfers were probably made pursuant to an estate plan. (Nothing sinister in that. Remember, Myers is a good deal older than Gates and Dell and has to think of such matters.) The other sales generally have taken place before the due dates of estimated income tax payments. The sales look like they've been made to raise extra money for those payments. (I don't think Myers is anywhere as affluent as Gates and Dell.)
Without going into the numbers, the other executives and directors of RSYS (except for David Budde who retired) also don't seem to have a predetermined plan to unload their stock. (Keep in mind that the temptation is great since most of their options allow them to acquire the stock at $8.08 per share.) Still, despite the profit to be realized, no executive has sold more than 15% of the shares he owned over the 2-year period I examined. And, the sales that were made seem to have had little effect on the market.
The big dumpers of the stock in the last two years have been Tektronix and Intel. The sales--as management keeps saying--are expected, and these sales ARE part of what seems to be a predetermined plan. Obviously, both companies took stock instead of cash in transferring assets to RSYS. It is in their corporate interest to convert their stock to cash over a period of time. However, these sales do hurt the price of the stock. When Intel dumped over 280,000 shares of RSYS in 12/97 at between 36 and 42, it obviously created the trading range the stock is now stuck in. (The "Street's" reasoning is, obviously, that Intel wouldn't have sold when it did if it thought the stock would soon go to 50. The "Street's" reasoning is faulty, but we'll have that discussion another time.) Of course, if RSYS redeemed those shares from Intel and Tektronix, we shareholders would have benefitted greatly from not having them be a drag on the market. Also, the redemptions would have increased the value of our shares in two ways: 1. With fewer shares in the "float,"our shares would be worth more; and 2, there would be a pool of shares to satisfy outstanding executive stock options (see next paragraph).
The issue raised in #2, above, is one of the raging accounting issues in corporate finance right now, and the tech companies are right in the middle of the fury. We can use RSYS as an example. There are still close to 2 million shares authorized for issuance to cover executive compensation stock options. These options will allow certain executives to purchase those shares at bargain-basement prices. The potential of those purchases dilute the value of our shares. The accounting firms (and the SEC) would like the public corporations to account for that dilution. Tech companies, with hundreds of millions of these options outstanding, have fought having to disclose the extent of any dilution brought about by outstanding but unexercised options. (Say what you will of Gates, but MSFT is one company that does inform its shareholders of the extent of any future dilution in the value of its shares.)
Now, Myers would tell you he needs the money for operating expenses and research, BUT, if RSYS satisfied its executive compensation options with stock redeemed from Intel and Tektronix, there would be no dilution and the value of our shares would be enhanced. (Such redemptions would also indicate the company's faith in its own future, which the "Street" would take note of.) Myers is probably right, but if you think otherwise--let the letters begin! |
