The month of July was actually the exercise of options by the executives of the Locaweb, the e-commerce solutions company that listed shares on B3 in February last year valued at R$2.5 billion and is now worth R$15 billion. After directors and executives sold R$ 40 million in shares throughout this year and aroused the attention of investors, there was a recomposition of the position of these administrators. O EXAME IN anticipated the theme last week.
Together, they now account for almost 1.3% of Locaweb’s capital — considering only non-controlling board members. The position in shares increased by 69% from June to July, after a combined investment of around R$ 8 million. But it’s a fact: managers’ participation sales started to be monitored by the market. The information is disclosed monthly, in a report sent to the Brazilian Securities Commission (CVM).
The movement of directors and executives — of any company — is closely watched because these participants are considered ‘insiders’ of the business and, therefore, an important price parameter. In theory, if they buy shares, it is because they understand that it is cheap and if they sell, it is because they would be at a price sufficiently interesting to exit the business. Aware of this, most company reports on this are “a non-event”.
In the case of Locaweb, there is a big incentive to sell. The share purchase price is extremely advantageous for executives, as the programs are very old. On the stock exchange, the company’s shares ended on Monday, the 2nd, at R$ 25.28. Purchases by the administrators took place at prices ranging from R$1.75 to R$2.50. That is, at the very least, capital can be multiplied by ten.
Locaweb has had stock option plans — and now stock options — as part of executive compensation for more than a decade. However, the company only listed shares on B3 last year. So executive earnings were pent up. In 2020, for example, outside the initial public offering (IPO), the board members put in their pockets almost R$ 70 million. Is the Locaweb experience a trend for newcomers?
According to the company’s documents, the plans have ‘vesting’, a period in which the executive is entitled to purchase the papers, for four years (with a 25% release each year), but the benefits are valid for six years. So yes, it’s possible that executives with “old rights” are selling their shares.
With the acquisitions announced yesterday, for the month of July, investors’ concern regarding alignment is partially allayed. However, there is still discomfort in the air about what these sales mean in terms of price. Did the roles reach a value never imagined by managers?
The market will look for a comparison. Do executives from Meliuz, Enjoei and Mosaico, for example, sell as many shares as the managers of Locaweb? Did they already have options plans? Is it a sign that, deep down, nobody knows the value of assets and that everything, including startups, can be disrupted the moment after their creation? Or that, in addition to the Infracommerce package that generated so much noise in the pre-IPO, the newcomers’ option plans will be scrutinized.
From 1 to 5, what is your reading experience on the exam?
1 being the lowest note and 5 being the highest note.
Your feedback is very important to build an even better EXAM.