http://www.bloomberg.com/apps/news?pid=20601087&sid=an67fVH6iWVM&pos=1 Feb. 5 (Bloomberg) -- Goldman Sachs Group Inc. Chairman and Chief Executive Officer Lloyd Blankfein was awarded $9 million in stock for his performance in 2009, a year in which profit soared to an all-time high and the shares doubled. The sum falls short of the Wall Street record that Blankfein, 55, set with his $67.9... [more]
http://www.bloomberg.com/apps/news?pid=20601087&sid=an67fVH6iWVM&pos=1
Feb. 5 (Bloomberg) -- Goldman Sachs Group Inc. Chairman and Chief Executive Officer Lloyd Blankfein was awarded $9 million in stock for his performance in 2009, a year in which profit soared to an all-time high and the shares doubled.
The sum falls short of the Wall Street record that Blankfein, 55, set with his $67.9 million bonus in 2007. Blankfein’s payment of 58,381 restricted stock units, valued at $9 million at today’s closing price of $154.16, was disclosed today in a filing with the U.S. Securities and Exchange Commission.
http://www.jcbraddock.com/book/chapter13.html
Discounted Private Equity Sales. Discounted private sale by investor of restricted stock to counterparty who holds stock until it is freely tradable or otherwise further monetizes it or sells it pursuant to an exemption from registration; investor loses all control and equity ownership in the stock, receives less than 100 percent of the current market value of the stock, but has no economic risk in the position going forward.
Monetizing Equity Swap. Investor exchanges cash flow obligations with a counterparty relating to investor's restricted stock or concentrated equity position in exchange for the returns of another asset or diversified index; transaction generates temporary cash proceeds to the investor who retains stock ownership and voting rights but is still exposed to market price risk
Sale of Deep-in-the-Money Call Options. Investor partially monetizes and hedges restricted or clean stock position, retains control of stock and avoids taxation; investor's downside price protection is limited to amount of premium received; no investor participation in upside appreciation beyond value of premium received; at expiration investor must pay counterparty any per-share amount above the strike; investor's upside price exposure mitigated by eventual salability of stock position; moderate risk to investor.
Sale of Out-of-the-Money Call Options. Costless yield enhancement strategy to investor; investor sells the option, receives cash, retains control of stock, and avoids taxation; price protection to investor up to the strike and downside protection equal only to the value of the premium received; investor suffers loss if the stock price declines below the value of the premium received; investor's upside price exposure mitigated by eventual salability of stock position; investor retains downside stock price risk.
Purchase of Put Options. Investor obtains downside price protection on equity position by purchasing a put option; investor retains control over stock and all appreciation potential.
Zero-Cost Collar Transactions. Costless trade to investor seeking hedge protection of equity position without incurring any out-of-pocket costs (e.g., also referred to as "costless" or "cash settled" collars); investor retains control of stock and avoids taxation; investor achieves price protection by selling a call and buying a put, therefore locking in gains between put and call strikes; investor's upside price exposure through the sale of the call option is offset by the ability to sell the actual stock position; minimal risk to investor.
Monetizing Collar. A zero-cost collar transaction (see above) combined with a margin loan; proceeds to investor are typically greater than a conventional margin loan.
Short against the Box. Investor fully monetizes restricted or clean stock, locks in price, has use of cash proceeds during the term of the position, and retains control of stock; investor runs the risk of borrowed stock being called away, but risk is mitigated by deliverability of stock held as collateral; presently not a taxable event but currently being reviewed and subject to change by the Internal Revenue Service.
Trust Structures. Legal "containers" into which restricted stock can be deposited or pledged and resold as units to other investors; investor retains voting rights, partially monetizes a concentrated equity position, hedges price risk, and defers potential tax payments during the life of the trust.
Sale of Stock Through a Structured Equity Program. Provides public corporations, affiliates, and shareholders with a means to sell large amounts of stock over time in a cost-effective, consistent, and "quiet" manner; outright sale of stock through an SEC shelf registration.
Many of the strategies to be discussed involve a high degree of risk and, as such, the client will be required to have the appropriate sophistication to understand the relevant risks of the transaction and the financial ability to satisfy any payments that might be required to be made. Clients should be advised to conduct an independent review, consult their investment advisors, and reach their own conclusion regarding the legal, tax, and accounting aspects of a proposed transaction as it relates to their asset, liability, or other risk management objectives. Investors should also be aware that, as a private OTC transaction, there is no established secondary trading market for the positions established in most of the strategies to be discussed. Therefore, secondary trading liquidity for the position, if any, will be provided by the counterparty to the transaction, thus creating additional risks for the investor.
[less]
