ITV Does Make Cash, At Least for Insiders
Wink Communications Inc. CEO Maggie Wilderotter was quick to correct Rich Cronin in July when he asked her about the rumor that 40 percent of Wink's employees were millionaires.
The number was not 40 percent, Wilderotter told the former Fox Family Channel CEO during the closing session at an industry conference. About 50 percent of the interactive-television company's 120 employees are millionaires, she said.
Wink is not the only interactive-television player that has reaped millions of dollars of personal wealth for its employees. Even though most U.S. cable systems haven't rolled out any enhanced-television services, the specter of an eventual interactive-TV boom has turned several employees at Wink, Liberate Technologies and WorldGate Communications Inc. into millionaires.
Securities and Exchange Commission filings and insider-trading data from First Call/Thomson Financial showed that Wink, WorldGate and Liberate, as well as their top executives, have a lot in common.
None of them has deployed services to a substantial amount of cable subscribers. The three companies count fewer than 1 million subscribers combined worldwide.
Share prices for all three companies are down sharply since the beginning of the year. But that is also the time period during which many executives cashed in options and sold large numbers of shares.
Among them was Liberate senior vice president of strategic development Steven Weinstein, who sold a total of 184,166 shares for $11.8 million this year, according to filings. Weinstein, who declined to comment for this article, has apparently sold more shares than any other Liberate executive.
Weinstein's biggest trading day was Jan. 24, when he exercised 45,504 options at 18 cents per share and sold the stock at $86.77 per share for a total of $3.9 million. Weinstein currently owns 36,500 shares of Liberate stock, which traded at about $33 last week.
Liberate CEO Mitchell Kertzman exercised a total of 204,166 options to buy Liberate stock at $2.55 per share, sold it at prices ranging from $26.48 to $103.25 each and netted $13 million on sales between February and July.
Liberate chairman David Roux sold 183,333 shares, netting $11.5 million. On Feb. 17, he exercised 83,333 options at $2.55 per share, selling them at $103.25 each. He made $8.4 million on the transaction, and he still owns 490,276 shares.
Philip Vachon, Liberate's senior vice president of worldwide sales, has sold 127,000 shares, mostly by exercising options with strike prices ranging from $1.08 to $3.55 per share. He got $5.56 million from selling Liberate stock, and he still owns 20,250 shares, filings indicated.
First Call/Thomson sent out an alert after Roux, Kertzman, Vachon and Weinstein registered to sell 297,666 shares combined at the end of July.
"It's never encouraging to see insiders selling shares of a beaten-up stock," analyst Norman McKnight wrote in the alert, noting that the foursome registered to sell the shares at a range of $26.49 to $30-far off Liberate's highs.
Other Liberate millionaires include chief financial officer Nancy Hilker, who has sold 84,552 shares, netting $4.6 million, and senior vice president David Limp, who sold 71,530 shares for $4.6 million.
Limp said the company wouldn't speculate on the fluctuation of its stock, adding that he and other Liberate executives remain bullish about the growth prospects for the company, which, he claimed, counts more than 300,000 subscribers worldwide.
"Things are fine. Business is good. We're building a long-term business," he said.
February was a big month for Wink. Its share price closed at a high of $70.88 Feb. 14, but it lost $11 in value the following day.
That's when the six-month lockup following Wink's initial public offering expired and several executives cashed in.
Wink chairman Brian Dougherty sold 355,000 shares in February, including shares sold by his family trust, netting $18 million in the process. CEO Maggie Wilderotter and her family sold 237,500 shares that month, netting $13.3 million. And senior vice president of marketing Katie Sullivan sold 112,500 shares for $6.3 million.
Shares in Wink, which were trading at below $14 each last week, are far off the level the stock hit before the lockup on insider trading expired in February. But Wilderotter made no apologies for employees cashing in, noting that they took big risks by joining a start-up.
"One of the main reasons why you go public is to have a liquidity event for investors. There are a lot of people who are insiders in the company who have been here a long time. And having some liquidity to that stock value was important to them," she said.
She also emphasized that as the second-largest individual shareholder in Wink, she still owns more than 2 million shares, and she's very confident in Wink for the long term.
"If I didn't have the confidence level in the company, I could have sold a ton more shares back in February or over the past several months. But I have a very high level of confidence," said Wilderotter, who hasn't sold any Wink shares since February.
Other Wink executives who cashed in some options include executive vice president Allan Thygesen, who sold 100,000 shares for a net profit of $5.6 million in February. And senior vice president Timothy Travaille sold 70,000 shares for $4 million.
In 1996, former top General Instrument Corp. executive Hal Krisbergh invested $1.5 million to help launch WorldGate, which last reported 42,000 subscribers to its "Internet on Every TV" service.
Today, Krisbergh's shares in WorldGate are worth more than $100 million on paper. He has also sold 400,000 WorldGate shares to date, pulling $9.3 million. In addition, he's doled out shares worth more than $6 million as gifts, mostly to his family.
"I think it's only normal that a lot of people put money in and take money out. I've put a lot in, and I think it's appropriate that I take some out and diversify somewhat. That's pretty much standard," Krisbergh said, also emphasizing that he took a large risk with his initial WorldGate investment.
WorldGate has also brought a windfall to cable pioneer Alan Gerry. Krisbergh said Gerry invested less than $2 million in WorldGate as an original investor. The former Cablevision Industries chairman sold 421,000 WorldGate shares in November 1999, netting $10.3 million. Gerry, who sits on WorldGate's board, still owns 186,666 shares.
Other WorldGate millionaires include vice president and general manager David Wachob, who sold 50,000 shares for $1.1 million.
Vice president of operations Jae Lee sold 30,000 shares for $969,100. But on Aug. 28, he registered to sell up to 25,000 shares, which would generate an estimated $500,000.
LESS AT OTHER FIRMS
By comparison, there has been less insider trading at three other publicly traded interactive-television vendors: OpenTV Corp., ACTV Inc. and Source Media Inc.
But three top OpenTV executives did register to sell several million shares combined in two separate SEC filings in June and August. CFO Randall Livingston registered to sell 50,000 shares, which would generate an estimated $2.6 million. Chief technology officer Vincent Dureau filed to sell 40,000 shares ($2.1 million). And CEO Jan Steenkamp registered to sell 45,000 shares ($2 million).
Shares in OpenTV have dropped drastically from the peaks they hit earlier this year. The stock opened the year at $81 per share, soared to a high close of $226 in March and has fluctuated since then.
Two ACTV executives have cashed in shares worth more than $1 million. Bruce Crowley, president of the company's HyperTV Networks Inc. unit, sold 70,000 shares for $1.1 million last October, but he hasn't sold any shares since.
CEO William Samuels sold 168,601 shares in the past year, generating $2.5 million. All but the 6,500 shares he sold last October were listed as gifts.
Insight Communications Co. Inc. CEO Michael Willner bought 20,000 shares of Source in May for $5 apiece. Other than that, there were no insider trades from individual shareholders.
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