There are some posts that make me weary before I even start writing them. This is one of them. On the Stockhouse forum, the poster “digitel” has taken a shot at the new biOasis CEO, Dr. Mark Day, because, according to SEDI reports, Dr. Day has not purchased shares in biOasis.
The insinuation is that an executive or director of a public company who does not own shares must believe that the company’s stock is not a good investment, and therefore it’s likely not good enough for the rest of us, either.
All of us who read Stockhouse know that digitel is a trader who tries to manipulate Stockhouse opinion to his trading advantage. He pumps the stock when it’s rising, he sells, and then he bashes it on its way down in hopes that he can manipulate it to a lower price. He can then cheaply buy it (again) and start the cycle all over again. In my opinion, it’s morally reprehensible behaviour. It also means that his opinions are conjured, rather than considered, and are therefore generally worthless.
So, what does it really mean when executives and directors do not buy shares in the company that employs them? Not a damn thing, that’s what!
Think of it. Most of you are employees. Should you have been expected to prove your belief in your new employer by buying a piece of the company? Should that be a prerequisite for consideration for getting the job? Or should you buy into the company before you even get a job interview?
“Ohhhhhhhhhhh,” you say, “that’s different!”
No, it isn’t.
You were hired because you had the right qualifications for the job, the right knowledge, experience and skill set, not because you bought your way into the company. As employees, the deal is this – you work and the company pays you! That’s the universal contract between employers and employees! If there are any shares of the company that come into play, it’s the company that allows you to buy some from treasury, usually at a discount and often with some sort of payroll deduction plan in place. In junior public companies like biOasis, options are used for the same purpose.
Further, employees are not entrepreneurs. Most entrepreneurs were once employees, but few employees were once entrepreneurs. Most employees have never had the time and opportunity to become sufficiently wealthy to buy into their employers. It can be different for directors. Some directors may be brought on board because they’re successful entrepreneurs. But here’s the thing. If a person has good business sense, which is what we want, why would they buy shares in a company when they can get options? Even if Mark Day dropped $100,000 into the market, his purchased shares would only be about 6% of his potential total of biOasis holdings. Why would he do that? If he does that just for optics to satisfy the likes of digitel then Mark Day can leave right now because I don’t want that kind of superficiality in my CEO.
And here’s proof that digitel never even gave a serious thought to the question. Mark Day has been in the business of evaluating new technologies that have the potential for acquisition or licensing by his employers, Alexion and Purdue, to name just two. It’s almost certain that he was evaluating biOasis for both companies. There’s no way that those companies would allow Mark Day to purchase stock in the companies he’s evaluating, including biOasis. That would be an unsupportable conflict of interest. To do it would be a hanging offense at Alexion and Purdue.
Then ask yourself (as digitel did not do), what was Mark Day told by biOasis before he was hired? You can bet the farm that he was told everything he needed to know in order to make a decision about joining biOasis, including a bunch of secret stuff. He probably knew enough insider information that he couldn’t buy stock if he wanted to. Further, it’s been my guess for some time that there is at least an informal blackout in place at biOasis. There’s a lot going on there that the public does not know.
Accepting this position is Mark Day’s big entrepreneurial move, the type of move that can make a career and can make a person wealthy. He appears to be eminently qualified to do the job for us. I don’t care how much stock he owns, not given the 1.5 million options he’s getting.
This I know – wealth does not equate to knowledge and intelligence. I’ll take smart, engaged and ambitious, any day!
Note: A previous version of this post had a political reference in it that I have since removed.
© 2017 John N. Davenport