I've worked in various roles at multiple listed companies...

I've worked in various roles at multiple listed companies previously. It is typical for employees who are deemed to have access to market sensitive information to be bound by the trading policy, including the blackout period, which ranges from 30 to 45 days prior to any foreseeable market sensitive trigger. Such triggers include qtrly, half yearly and annual report, earnings, and expected material operational updates. For those on the executive management team, the blackout can be even more restrictive to such an extent that their available trading window is extremely limited.

SN recently exercised 2.67mn options.

A quick glance through the recent Annual Report showed his options holding...


So the options he exercised were issued on the 1st July 2020. As these were long term incentive options, they would have been issued at a premium to the prevailing price at the time (which was around 20c). So assuming the exercise price was set at 25c, the exercise of those options would equate to a nominal capital gains of approx 401k (2671580 * (0.40-0.25)). Add in his current salary of 670k, it will being his total assessable taxable income to 1mn. His super would be above the 27.5k concessional limit, meaning he would have to pay div 293 tax as well. All up, he is looking at a tax bill of approx half a mill give or take - which is basically what he realised for his share sales.

The other point to consider is that when options are exercised, the cost base for the resulting shares are set at the exercise price. So in my example, it would be 40c. By selling at 40c, the share sale itself would not attract further capital gains tax because he didn't make a paper profit on the sale of those shares.

If you have a major tax obligation to fulfil and you need to sell shares to help fund it, it is very prudent to lock in the funds as soon as the first available trading window opens. Let's at least do some digging and maths before we judge.

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