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Paul Kemp exercising option?


#1

Ok, so I found this little bit.

http://www.intercytex.com/icx/investors/rns/rnsitem?id=1201882420nRNSA1398N&t=popup

I am not sure at all what it means except that it involves exercising his option of 500,000 shares. Whether this means that he is selling shares or buying shares I cannot determine. Also, this little bit of the document seems strange:

  1. Name of person discharging managerial responsibilities/director

    Paul Kemp

Read one way, this says name of person leaving the position. In another way, it can simply be saying: name of manager.

Ok, so if anybody has any clue about this sort of thing, analysis…


#2

» Ok, so I found this little bit.
»
» http://www.intercytex.com/icx/investors/rns/rnsitem?id=1201882420nRNSA1398N&t=popup
»
» I am not sure at all what it means except that it involves exercising his
» option of 500,000 shares. Whether this means that he is selling shares or
» buying shares I cannot determine. Also, this little bit of the document
» seems strange:
»
» 3. Name of person discharging managerial responsibilities/director
»
» Paul Kemp
»
» Read one way, this says name of person leaving the position. In another
» way, it can simply be saying: name of manager.
»
» Ok, so if anybody has any clue about this sort of thing, analysis…

oops, this could be bad news. This means he is selling his shares? Are there any finance majors here ? If he is selling his shares, that s bad news.


#3

I studied Finance and this is only an idea.

He might be leaving the company or selling stocks to investors to get them to invest in Intercytex.


#4

he is exercising his option to buy shares. he isnt selling anything. as a senior person in the company, they are giving him the right to acquire shares at a certain price upon a certain date. he is exercising that right to acquire the sales. granted it is for a penny so he is only buying shares for himself at a penny i believe but in any event he has decided to acquire equity. he is not selling it.

usually this is a right for very senior people at an organization and an option is granted and exercisable at a ‘strike price’ in the future. it incentivizes managers to build value in a company so that they can acquire shares at a price lower than the market value and make a lot of loot by increasing share price significantly


#5

» he is exercising his option to buy shares. he isnt selling anything. as a
» senior person in the company, they are giving him the right to acquire
» shares at a certain price upon a certain date. he is exercising that right
» to acquire the sales. granted it is for a penny so he is only buying shares
» for himself at a penny i believe but in any event he has decided to acquire
» equity. he is not selling it.
»
» usually this is a right for very senior people at an organization and an
» option is granted and exercisable at a ‘strike price’ in the future. it
» incentivizes managers to build value in a company so that they can acquire
» shares at a price lower than the market value and make a lot of loot by
» increasing share price significantly

Are you 100% sure from reading the report that he is buying shares? They are about to release 3 & 6 month updates on many trialists. That probably means good news ahead.


#6

The whole thing confuses me because it feels like insider trading, but what do I know?


#7

» he is exercising his option to buy shares. he isnt selling anything. as a
» senior person in the company, they are giving him the right to acquire
» shares at a certain price upon a certain date. he is exercising that right
» to acquire the sales. granted it is for a penny so he is only buying shares
» for himself at a penny i believe but in any event he has decided to acquire
» equity. he is not selling it.
»
» usually this is a right for very senior people at an organization and an
» option is granted and exercisable at a ‘strike price’ in the future. it
» incentivizes managers to build value in a company so that they can acquire
» shares at a price lower than the market value and make a lot of loot by
» increasing share price significantly

This sounds right to me. Though I’m still little confused with that english term “discharge of managerial responsibilities”.

All in all no one sold anything to anyone using LSE. you can see it on the graph, no shares were sold.

What I see is that he was granted some options if certain conditions are met and the conditions were met, and he used the option to buy the shares for the 0.01 price a share (which I’d buy as well :)). Anyway, it would be interesting to figure out what the conditions were


#8

» he is exercising his option to buy shares. he isnt selling anything. as a
» senior person in the company, they are giving him the right to acquire
» shares at a certain price upon a certain date. he is exercising that right
» to acquire the sales. granted it is for a penny so he is only buying shares
» for himself at a penny i believe but in any event he has decided to acquire
» equity. he is not selling it.

Incorrect. “Exercising” the options mean you have acquired the right to purchase the stock at a given price previously, and now you are exercising that right to buy the stock and simultaneously sell it. This, in fact, is a transaction where Paul Kemp is selling his shares. It does seem odd that he would sell them so close to the projected release date of Phase II data. I am not familiar with legal oversight of financial transactions in the UK, but if he were in the US and the March results are less than stellar, he would almost assuredly be under investigation by the SEC. This piece of news was very interesting, I had not heard it until coming upon it on this board.


#9

» » he is exercising his option to buy shares. he isnt selling anything. as
» a
» » senior person in the company, they are giving him the right to acquire
» » shares at a certain price upon a certain date. he is exercising that
» right
» » to acquire the sales. granted it is for a penny so he is only buying
» shares
» » for himself at a penny i believe but in any event he has decided to
» acquire
» » equity. he is not selling it.
»
» Incorrect. “Exercising” the options mean you have acquired the right to
» purchase the stock at a given price previously, and now you are exercising
» that right to buy the stock and simultaneously sell it. This, in fact, is
» a transaction where Paul Kemp is selling his shares. It does seem odd
» that he would sell them so close to the projected release date of Phase II
» data. I am not familiar with legal oversight of financial transactions in
» the UK, but if he were in the US and the March results are less than
» stellar, he would almost assuredly be under investigation by the SEC.
» This piece of news was very interesting, I had not heard it until coming
» upon it on this board.

Exercising = selling. To do so so close to the release date of product research would be very much illegal in the States. It would be tantamount to Steve Jobs unloading Apple stock prior to the release (or shelving, rather) of an unsuccessful Iphone.

This is a bad omen. Another phoney euro product. I’ll stick with Follica.


#10

I disagree with dr. rassman.

Everyone would agree that they were call options (no company in the world will motivate their managers by giving them put options which would mean that the manager would make money if the company performance was going down).
Here’s what wikipedia says:

The owner of an option contract may exercise it, indicating that the financial transaction specified by the contract is to be enacted immediately between the two parties, and the contract itself is terminated. When exercising a call, the owner of the option purchases the underlier at the strike price from the option seller, …

Pretty much all companies give their managers options with physical settlement. It bounds them better to the company.

Here’s once again wikipedia:

Physical settlement - Physically-settled options require the actual delivery of the underlying security. Examples of physically settled contracts include U.S.-listed exchange-traded equity options.

Cash settlement - Cash-settled options do not require the actual delivery of the underlier. Instead, the corresponding cash value of the underlier is netted against the strike amount and the difference is paid to the owner of the option. Examples of cash-settled contracts include most U.S.-listed exchange-traded index options.

===================================================================

In none of the cases the share was sold. Also because it is european option, the option could be exercised at the end of it’s validity. So the conclusion is that if he didn’t do it, it would be just a piece of paper. And he could not do it before the end date. This is a difference between us and eu options.

For all these reasons dr. rassman is wrong this time. There are two possibilities, he received shares or he received cash. and in none of them it would mean anything about march. He pretty much had to do it at that date or turn the options into nothing.


#11

Guys, here’s what the notice means:

  1. Item 3 should read “name of person discharging managerial responsibilities OR name of director”. In this case, it refers to the “name of director”. Paul Kemp is not discharging any duties of any kind.

  2. The notice simply means that Paul Kemp has converted 500,000 call options into stocks. Previously, he held 500,000 call options with a strike at $0.01. This means that even though the ICX share price is now $0.50, he could have bought each share of only $0.01. As such, each call option is worth $0.49 ($0.50 - $0.01).

  3. The options were converted into shares. Look at item 15 - this tells you how much shares Paul Kemp now has.

  4. What does this mean? Well, it just means that instead of holding one option worth $0.49, Paul Kemp has decided to pay $0.01 and hold a stock for $0.50. It means nothing more than that. He is simply exercising his option because the company has allowed him to. Is he cashing out? No, because if we truly wanted to cash out he could have sold his options (options are traded on the market). Could he consequently sell his shares? Yes, he definitely could. Financially, he is no better off or worse off. I would advise anyone not to read anything into this. People convert their options into shares all the time. They could hold these shares forever or sell them tomorrow (however this is unusual as they would simply sell the option if they wanted to cash out).

BTW … HAPPY CHINESE NEW YEAR OF THE RAT TO ALL! It would be fitting if a hair loss cure came out this year … I mean, given that rats/mice seem to be the only beneficiaries of hair loss advances so far …


#12

Are you really Dr. Rassman? Just curious.


#13

He’s just acquired 500 000 shares for 0.01 each.

I think it’s a good news. He must have acheived some important goal. I read loads of reports today and didn’t find an anouncement explaining when they issued the options.

But I have found this encouraging statement:

http://www.iii.co.uk/investment/detail/?display=news&code=cotn:ICX.L&action=article&articleid=6451935


#14

» I disagree with dr. rassman.
»
» Everyone would agree that they were call options (no company in the world
» will motivate their managers by giving them put options which would mean
» that the manager would make money if the company performance was going
» down).
» Here’s what wikipedia says:
»
» The owner of an option contract may exercise it, indicating that the
» financial transaction specified by the contract is to be enacted
» immediately between the two parties, and the contract itself is
» terminated. When exercising a call, the owner of the option
» purchases the underlier at the strike price from the option seller,
» …

Gentleman, there are many debatable topics in hair loss but this is typically not one of them. When you exercise an option, as the article says, you purchase those options at strike price agreed upon by the buyer and the underwriter of the options. But the structure of an option is that when you exercise, you buy the option at the aforementioned price and then immediately sell. I might not have explained it fully earlier, but exercising an option is a simultaneous buy/sell order. You agree to buy the options at the strike price, then you immediately sell your shares netting a profit of the current price minus the strike price times the number of shares.

In theory, I guess it is possible that Kemp is simply converting these shares into stock to hold onto, but that would make absolutely no sense because converting them into shares at this point entails a cost, and he would get the same expected reward at a slightly lower level of risk if he simply held on to the options as opposed to the stock. For this reason, in my experience I am not familiar with an executive converting shares simply to hold – the transaction has always been simultaneous. There’s just no good reason to do it otherwise. My honest guess is he is exercising these options to sell them.


#15

I do not agree doc. What you are saying is true for cash settled options (options ordinary people like you and me can conveniently buy on any major exchange).

It is not true for physically settled options which is a case of managerial options and a case of paul kemps options. you can read it even from the form (for example point 9, point 11, point 13, …). He did not convert the option into shares, by exercising the option he acquired a portion of shares (up to the date of transaction held by the company) for the stated price.

anyway I guess we won’t know who of us is right unless we phoned them and asked :slight_smile:


#16

point 9 says:

  1. Number of shares, debentures or financial instruments relating to shares
    acquired

    500,000 Ordinary Shares

point 11:

  1. Number of shares, debentures or financial instruments relating to shares
    disposed

    None

===================================

whether here’s an example of the same form where the option was exercised & cashed:
http://www.easyjet.com/en/investor/notification_of_transactions_1_december_2005.html

points 9 & 11 are different, as well as the description of the transaction


#17

6th May 2004

Farjo commented “I am delighted that TrichoCyte has proven safe in all volunteers enrolled into the trial"

28th march 2006

Rassman - “I personally do not believe that the safety issue can be resolved in anything less than 10 years, so do not hold your breath”

Either dr rassman is deliberately misinforming the public about HM or he knows very little about it.

Make your own minds up


#18

Is it a put or a call option ? It is not indicated on the statement released.

If it is a put option, Paul Kemp has exercised his right to sell the actions he owned.

On the other side, if it is a call option, Paul Kemp has exercised his right to buy the 500.000 shares.

So ?


#19

of course it’s a call.

no company ever would motivate their staff with a put option (more down the price would go, more money would the staff earn).


#20

» of course it’s a call.
»
» no company ever would motivate their staff with a put option (more down
» the price would go, more money would the staff earn).[/
b]

Probably, but Paul Kemp could make big bucks by exercising his right to sell its shares if he knows that the share’s price will go up…