Thread by @EpsilonTheory

It’s the latest incarnation of the agency problem - massive stock issuance to management, masked by the narrative of “Yay, stock buybacks!”.

@EpsilonTheory goes mainstream, with a piece in the FT!

ft.com/content/0f863d…

Here's the insider stock-trading history of Andrew Wilson, Electronic Arts CEO. Each red flag is a sale of exercised options and vested RSUs. Even the green flags (net addition to stock holdings) all include a sale of free stock.

I think I found a winner for my next note.

Over the past 3 FYs, Electronic Arts bought back 22.8 million shares for $2.3 billion. Yay, return of capital!

Also over the past 3 FYs, Electronic Arts issued 10.7 million new shares to themselves for $211 million. About 1.5 million shares went to ESOP, rest to management.

When Electronic Arts vests a restricted stock unit (RSU) for management and directors, they issue 1.43 shares of common stock. Why? As a tax gross-up for the executives.

It's so weird that Electronic Arts uses share buybacks to "return capital to shareholders" but has never paid a dividend.

I'm sure they're just really concerned about the tax consequences for shareholders from dividends vs. buybacks.

"These are important but very hard decisions, and we do not take them lightly," Wilson said. "We are friends and colleagues at EA, we appreciate and value everyone’s contributions, and we are doing everything we can to ... help them through this period."
businessinsider.com/electronic-art…

5 days after this layoff announcement, CEO Andrew Wilson exercised some cheap options and sold 30,000 shares of stock for more than $3 million.

#BITFD

Martin Shkreli was a piker compared to these guys.