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Technology Stocks : MSGI Marketing Services Group Inc. -- Ignore unavailable to you. Want to Upgrade?

To: John Madarasz who wrote (3357)	8/11/2000 6:24:40 PM
From: adsorb	Respond to of 3418

I think you might agree the only financially relevant part is... -------------------------------------------------------------------------------- 10. 9. Owner- Number ship of Form 2. Deriv- of Conver- 5. 7. ative Deriv- 11. sion Number of Title and Amount Secur- ative Nature or Derivative 6. of Underlying 8. ities Secur- of Exer- 4. Securities Date Securities Price Bene- ity: In- cise 3. Trans- Acquired (A) Exercisable and (Instr. 3 and 4) of ficially Direct direct Price Trans- action or Disposed Expiration Date ---------------- Deriv- Owned (D) or Bene- 1. of action Code of(D) (Month/Day/Year) Amount ative at End In- ficial Title of Deriv- Date (Instr. (Instr. 3, ---------------- or Secur- of direct Owner- Derivative ative (Month/ 8) 4 and 5) Date Expira- Number ity Month (I) ship Security Secur- Day/ ------ ------------ Exer- tion of (Instr. (Instr. (Instr. (Instr. (Instr. 3) ity Year) Code V (A) (D) cisable Date Title Shares 5) 4) 4) 4) ------------------------------------------------------------------------------------------------------------------------------------ Options $4.50 07/07/00 A 400,000 (A) Various 07/07/10 Common 400,000 $4.50 400,000 D ------------------------------------------------------------------------------------------------------------------------------------ 1. options (granted incentive compensation on 7/7/2000) 2. conv. price (granting break even price; sell at $4.5 for $0 gain; sell at $44.5 for $40 gain, per share) 3. date of grant (usually denotes a BoD meeting - wrt officers grants; so I think we know somthing extra now; & JT Gerlach bought same day) 4. I think this is a misnomer; I think it should indicate granted; usually to new employee, SK wound up with a much neater entry price at $4.5 grant 5. unless they (BoD) want to be fair to others with much higher exercise prices, SK shouldn't have any incentive to buy outright he could just buy on open market! same value why call these options? 6. strongest indication is that these are pending sale at various dates in future; the standard option granting mechanism is for the company to hold "one's" options available until convert date, at no (NONE) cost to employee/director /officer/etc. 7. common shares 8. 400k 9. price 10.400k under his "Direct" control 11.Direct I agree it looks weird. But the usual way to deal with options from an employee's point of view is to: first be granted something; for a long-history operating Co. that grant is pinned at the grant day market close price. for startups it could be pennies per share. second and implicit in the spirit of incentive is to work hard for the Co. so as to appreciate its value, i.e. price third and final is to see that appreciation, hopefully several fold over some years (for Normal companies) and benefit by "option-related buy" (presumably in this case) and "open-market sell", or "non-open market sell". the benefit (excluding taxes) is the difference. See below an example at GE, with a pick of one of Welch's runners up. but tack your own Co. choice and see the paired B* and S, or 144 with or without form 4 (actual sale), just the "trans date" of sale or buy, and "date entered", typically required within 10 days of next month (SEC rules). insidertrader.com I don't see another possible scenario for options acquisition with any special advantage (unless he (SK, too) expected the price to go to many times it value today very very soon; you judge that one). But options aren't granted every day, so this choice doesn't fit a quick profit at, say, $7, $10, $12.24 - (less and less likely). So why would he sit on a $1.8 M debt in hope that the price will some day appreciate. The company is supposed to hold that virtual value in its safe until exercise time, for the "valuable" employee's incentive, benefit and good faith - and then we, the share holders thank the valuable employee for his good and dedicated work by having a little dilution - in this case it will eventually be 1.33%, or 1/16 at today's price. but hopefully SK will have been worth a few sixteenth's by then! (if this explanation doesn't suit the situation I would like to know a detailed alternate scenario - including the fact that we are talking about options, as per Form 4 docu.) for comparison you can scan the particulars in Mullen's sale in Jan 2000, below (he was President too, with 400k): nasdaq.com`&selected=MSGI btw, here's a more detailed From 4/A on JT Gerlach. Looks like some of his options are execisable and in fact the break down (should be combined with my earlier post) shows the components of the 92,000 options he still holds. 30k are profitably exercisable now, with exercise price of $3.11 the $8.50 and $11.625 would not be in his best interest now. nasdaq.com`&selected=MSGI