For me, I think what is important is the general trend of the executives. I think it was Kirk, or maybe GVTucker who made the point. CSCO is a solid company....dominant in their market by a longshot. Yes there are niche companies who may be giving a given business unit some competition, but for breadth of market coverage, there ain't much argument where CSCO stands. And yet, the stock has certainly not been the performer that it once was. Interestingly, this should be a self correcting problem. People in silicon valley go to companies who grant stock options with the intent of hitting a homerun (I know you know this). If the options themselves are weighing the stock price down, many of the best talent will seek smaller companies where they have the potential for a homerun. Another example of creative destruction at work.
I am not concerned as much with the appearances that you pointed out. Without knowing how many options they still have in their back pocket and also, importantly, when they were granted, it is hard to ascribe significance.
I didn't mean to imply that a VP's action isn't significant. If you see a Senior VP of manufacturing or of sales, doing a lot of selling, it may have more significance than others.
Ironically, what you see as a negative appearance is actually very positive for the stock overall. If JC exercises options to sell 2 million shares, that removes 2 million shares of overhang. If the executives all wait until their options are about to expire (I think CSCO's options expire 10 years after the grant date). What you will have is a concentration of selling by executives, which will give an even worse appearance.
I see the options overhang issue to be a serious one for CSCO's stock. The sooner those options are exercised, the better for the stock. And they won't disappear unless the employees/executives exercise those options.
This issue isn't appearances, it truly is the fundamental influence of the options overhang. IMHO...of course. |
