Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (172974)	2/11/2003 3:35:19 AM
From: Amy J	Read Replies (1) \| Respond to of 186894

Hi GV, but then that would be "after the fact", wouldn't it. But then, if taxes are say 50% of a total sale and if the exercise is 20%, that leaves only 30% left over as profit, and half of that would be 15%. So, if an exec held onto 50% of their gains, which is a lot, it would only appear to be 15% of the total sale. So, what looks like a 85% dumping or hold of 15%, is actually a hold of 50% of the gains in this scenario, which is a large. According to the SJMN, there's some teacher's fund that's demanding execs hold onto 75% of the total sale. That doesn't make any sense. In order to retain 75% of the total sale, the exec would have to run a deficit in order to pay for the taxes, which doesn't make sense. (Teachers must have only a 25% tax rate if they think a person can hold onto 75% of a nonqual stock sale that requires immediate tax payment, unlike ISOs, on the order of 50%.) Let alone the exercise value that has to be taken out that's probably on the order of 20%. How can an exec hold onto 75% when they have to pay 70% and that leaves only 30% (not 75%)? The SJMN had an article that said Paul O "made 11m" (so the title said), but assuming a top tax rate of 50% and subtracting out exercise payment, it looks like he "made 3.3m", which is 30% and miles away from 11m. On a different note, when a company does a merger, for the transaction not to be considered a taxable sale, I believe the IRS imposes the restriction that each insider cannot sell more than 1% of an individual's holdings per month and if they do sell more than 1% it changes the status from an MNA to a taxable sale, so in effect, I believe the IRS has defined a "sale" to be 1%/mo and anything sold that's less than 1% is considered a "hold" for purposes of defining if an event is a merger or sale. (I'm not sure if it's 1%, but it's around that I believe.) Said another way, an ethical guideline that companies could use (rather than getting the SEC involved with more rules), is to suggest something similar to what the IRS uses when determining if an insider event is considered an MNA status or sale status. Specifically, an ethical guideline (suggested by a company, not a rule by SEC) could be that an exec should hold onto 12% of their annual transaction, which would probably be around a third of the total profit. Do execs need to notify their intent to sell before conducting a transaction? Or, is it only after the sale? Regards, Amy J