After the offer was announced last week, Medarex shares nearly doubled, to $15.87. Mr. Pien had sold his shares for an average price of $8.31.Footnoted thought it was suspicious:
"He didn't want to tamper with the plan" in advance of the Bristol-Myers transaction, [a spokesperson] said.
While we don't yet know how long this deal has been in the works, it's a pretty safe assumption that Pien knew the broad terms of BMY's deal and the $16 a share price when he sold 34,000 shares at prices around $8.50 a share. Granted, the sales were part of a 10b5-1 plan, but the whole thing still seems a bit strange to us, especially given the fact that this appears to be a new trading plan for Pien.Pien was within his rights to cancel, the WSJ noted.
So either this was very odd timing or it was designed to throw the scent off of a possible deal since it's hard to believe anyone would set up a new plan to sell shares knowing the company would be acquired at a much higher price.
So, was Pien really throwing money away? Of course not. First, note that, as the WSJ says:
Mr. Pien sold only a fraction of the 435,555 shares and options he owned, according to the company's April proxy statement.Then pay attention to the fact that in the deal, Pien gets a $4.2 million bonus for saying yes to BMS. That comes on top of his usual compensation, which was $5.1 million in 2008. If that remains the same this year, Pien will walk out of the deal with total compensation of $17.1 million since mid-2007, when he started work.
So the $250,000 sale represents just 1.5 percent of the payday Pien will get. It is therefore not surprising that Pien was unwilling to upset the applecart with the deal already in progress, by drawing accusations of insider trading.