NEA (ASX) CFO backing NEA with big cash

Originally posted by Eccles10:2 ↑

Hi Kfann,

Thanks for your research and insightful comment on NEA.

Obviously managment has great confidence in the future. But I am still left wondering why these gents exercised now rather then kept their options open (if you'll pardon the pun!)

Do they just want to signal to the market their confidence in the company? Are they planning to resign in the near future, or worried about getting fired, and hence foreiting their options? Is NEA planning to restructure its incentive plans and so put the word out that options should be taken up now? Is there a lock-in period where they can't sell these shares, so they want to position themselves to be able to sell as soon as the US business is priced-in?

What do you think? I'm not an expert in all the conditions attached to these options, and so any other ideas about what might have caused this behaviour are very welcome.

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Welcome to the world of NEA, Eccles 10:2.

All very good and legitimate questions. I don't believe they are being fired...you don't give your ex that much cash; you save it for the next round. Usually if one wants to leave a company, there is a 30-90 day period to exercise any vested options; after which they are forfeited. It could also be for tax planning as suggested by lbao2k3. But we do not know how these options are held. A legal settlement? but I don't think so.

My first thought is one only exercises early if one wants to sell early. I can totally understand the guys doing the 7.5c options...$500k pre tax profit for each 1m parcel is incentive enough especially when you have more options to come. All coys have a lock in period where you cant sell you shares. In fact its more often than not. There are usually only 1 or 2 selling selling windows each year and even then only for short periods and only with the approval of the board. So maybe this is just getting the ammo ready for these small windows of opportunity. I just find Beukes's investment in ammo quite staggering.

I can kind of understand doing the 1.5m 41.5c options (but only if I had excess cash); they are after all, approx. $200k in the money. Yet I cannot at all understand doing the 53c options. CFO's of top 20 coys would flinch even at putting up $622k for the 41.5c options let alone putting up $800k more 2 years early for just-in-the-money stock. NEA has an employee loan scheme to ex the options so the cash is there but heck, that's still one hell of a loan. I also doubt the board would lend such an amount if the intension was to flog the stock straight away.

I've been in this game for a while and its not often I'm perplexed. But it would seem this CFO (and the CTO) has the confidence to stump up/go into debt by a huge amount before he has to.

But I'm just guessing here. Out of conspiracies.

Cheers,