Even though many think the tax breaks may be extended or may get brought up and retro-acted next year, it is not safe to assume that these millionaire and billionaire insiders will just wait and see hoping to trust the system.  No one really knows at what point the cut-off will be in income.  Now that there is gridlock, many fear that President Obama can just sit back and say “NO” to any tax breaks that pertain to
the wealthy.  Others will say that the new quasi-majority of the Republicans just want to get cronies tax breaks.  If a tighter lock-up period exists, these insiders may very well ask for board permission to break ranks and sell early.  In most cases, it is not exactly as though these insiders have to go get shareholder approval.  A simple board approval or even a simple exemption may be sufficient.  And don’t think that this just pertains to the wealthy insiders.  All of the millions and millions of stock options

The reality is that if you are a corporate insider, December 31, 2010 could be the last day of that person’s life that the capital gains tax is as low as 15% ever again.  Even if legislation gets going, the President can veto it and Congress is divided enough that a super-majority cannot undo the vote.  It will of course be called for “estate planning” or for “tax planning” but it should just be expected.  Many are hoping and praying that the tax breaks will be extended.  The problem in tax planning and in financial matters is that the strategies of hoping and praying are fine backup plans but they make for awful primary action plans.

As noted, we prepared a chart showing the insider holdings by company, name, share count, and the last ‘as of’ date.  You need to know that some of these insider positions are probably different by now in many cases.  The insider ownership rosters often do not tally every single share and often skip or eliminate those precious insider stock options.  Many other companies have the super-shares, and there are many missed that did not cover other family trusts and others which may not have included indirect ownership via stock option grants.  The goal is not to get the count accurate down to the share, but rather to show a ballpark estimate that will let you know how much is at stake.

JON C. OGG