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Tuesday, April 17, 2007

Sirius Files SEC Form 4's

April 17, 2006

Today Sirius filed Form 4's for Scott Greenstein and James Meyer. There are many who will look at this transaction and think that insiders are selling out. This is not the case if you look deeper into the transaction .

SCOTT GREENSTEIN

Sold 153,023 shares on 4-13 for a price of $3.08

This sale was made to cover the taxes and brokerage fees associated with the gain he had on restricted stock that had vested. Once the shares vest, the capital gains taxes are due. Mr. Greenstein sold enough of his shares to satisfy tax obligations and brokerage fees. Sales such as this are not tied to a sentiment about the company, but are rather tied to Uncle Sam demanding his cut.

JAMES MEYER

Sold 132,699 shares on 4-13 for a price of $3.08

The sales for Mr. Meyer is identical is reasoning to that of Mr. Greenstein.

Uncle Sam always gets his cut.....plain and simple.

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4/17/2007 11:27:00 PM


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2 Comments:

  • FWIW, while it may seem as simple as the shares vesting, then bam taxes are due, there is a more complicated answer.

    What happens is an employee is granted shares that will vest over time. At the time of the grant, it is not a taxable event. However, when the shares vest, the employee then takes actual ownership of the shares, typically for $0.00/share since they're stock grants. This triggers a taxable event.

    Taxes are then due on the amount of the gain, which is from $0.00 to the price of the shares on the day the stock vests. This is why and when employees will typically sell a portion of the shares to cover the tax and brokerage fees.

    They then have the remaining shares free and clear, with a cost basis that is based on the pps from the day the stock vested.

    It's a very common occurance these days, as more and more business give stock grants as bonuses, instead of stock options.

    By Anonymous Anonymous, at April 18, 2007 8:34 AM  


  • That is basically what I said. The taxes are due on the capital gains of the vested shares.

    "This sale was made to cover the taxes and brokerage fees associated with the gain he had on restricted stock that had vested. Once the shares vest, the capital gains taxes are due. Mr. Greenstein sold enough of his shares to satisfy tax obligations and brokerage fees. Sales such as this are not tied to a sentiment about the company, but are rather tied to Uncle Sam demanding his cut."

    This is a common occurance. The other situation that happens is when employees excercise opitions by using a paperless transaction. Such a transaction happened last fall and we covered that as well with a more lengthy expanation.

    http://satellitestandard.blogspot.com/2006/11/deeper-look-into-stock-sales.html

    By Blogger SSG, at April 18, 2007 9:31 AM  


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