from the article....
"In most cases, they can’t cash in now: options typically take three to four years to fully vest."
OK. Let's say I have 100K of stock options, locked in until 2014. Let's also say that as the CFO, I don't think the stock is going any higher than its present value, in fact I'm sure of that based on what I know about the company finances.
So, what's to prevent me from shorting the stock, and pledging the options as security? I pocket the current value of the company today, and in return, give up any future gains that might occur between now and 2014.
2014 arrives and I simple exercise the options, then transfer ownership per the prior agreement, to cover the short trade.
Would this be possible? Can I pledge those options as security, or is there some law or regulation that prevents this, and if so, is it even enforced?
Even if the options aren't negotiable, is there any reason I couldn't set up the above short sale pledging say treasury bills instead? Or does the fact I'm an insider categorically prevent me from shorting my own stock?
ebear
