It was fairly well recognized that the Internet boom was likely to crash and burn at some point, since the profits weren't there. So if you were a savvy CEO or executive, would you not cash in enough of your shares to make sure your future was protected?
I know I would, if I was CEO. It's just the smart thing to do, and as long as my financials are honest, there's nothing wrong with selling shares.
Public warnings that the tech boom was going to collapse were all over the place before it happened. A friend of mine wanted me to help him invest in Internet stocks at the top of the boom. I researched it and told him everything was way too overvalued, so I didn't want to do it. And guess what? I was right.
Here's the heart of the matter: Many of them held on to more stock than they sold, to give them continued control over their companies, and because they genuinely believed in their future.
Graef Crystal, a leading compensation expert in Las Vegas, believes the problem has been overblown. He points out that while many executives sold their stock, many of them could have sold far more, which they elected to keep and which eventually became worthless.In other words, they were not betraying their company, but simply diversifying their assets.``The fact that they left huge amounts of money on the table does not suggest they knew something was coming,'' Crystal said.
Is that bad? And should that be illegal?
D