Proving bankers aren’t the only ones to profit when their stocks tank, it appears that Steve Lipscomb won’t suffer much with the World Poker Tour’s stock languishing in the sub-$0.50 range. In a recent SEC filing, Lipscomb will now get 5% of the company if it changes hands this year – which will come right out of the shareholders’ pockets. His now worthless 600,000 stock options (currently at a strike price of $8) will be exchanged for 500,000 stock options priced at the current market price. And he’ll get six months of severance.
Needless to say the shareholders, who have watched the stock plummet from a high of $29.50, were not pleased. A stock message board poster wrote:
“As much as I would like to see a sale of this company, it absolutely disgusts me that Lipscomb will receive even further compensation if it happens. Let’s see, they pay him $500K annual salary and awarded him 2.3M shares when the company was taken public. He then dumped 700K of these shares at an avg price of about $19 for a profit of around $13M before setting off to destroy 95% of shareholder value over the next three years. He then repurchases 375K share at an avg price of around $.35, and is exchanged 500,000 new options at current market prices to replace the 600,000 he was granted that had a strike price of $8. To top it off, he’s then granted an additional 5% stake of the gross proceeds of the company (minus cash) should it be sold. I must ask, what has he accomplished to be awarded such additional compensation? This is a complete outrage, and just another grotesque example of corporate governance in this day and age.”
A common theory of WPTE posters is that the company is purposely driving down the price of the stock so that the Bermans can buy it private for a bargain. Although I can’t say I totally believe the conspiracy theorists premise, I was rather surprised the company wasn’t taking any action to keep the stock from being delisted and basically dumped Lakes’ WPTE shares on the open market.
But if the board mongers are correct, and if Lyle Berman were counting on tapping the Berman Revocable Trust for the purchase, let’s hope Madoff left him with a little something. The Trust gets listed a couple of times on Bernie’s client list.
While I was in Palm Beach last week, I considered TP-ing Madoff’s house down there. I had heard they weren’t prosecuting for the crime. See, that’s what happens. When everyone knows a law isn’t being enforced, breaking it becomes more of a temptation. And if there is money to be made from it – like pumping the price of a stock on a buyout rumor involving a company executive’s friend or operating a Ponzi scheme – it’s just gonna happen. Once the regulators have posted the “out to lunch” sign, the only thing left you can rely on is karma.
But not all regulators took the last eight years off. Dallas banker and poker player Andy Beal is known in the mathematical world for his Conjecture. And now, it appears he is known in the IRS world for his predicament. While the loss of $10+ million in heads-up poker hardly made Beal’s financial radar screen, the stakes appear to be much higher according the article link in this post.
I guess Michael Phelps’s suspension also falls under a regulatory heading. All I can say is that Phelps’ appeal may have dropped for the cereal crowd, but he totally boosted his cache for marketing online poker. After all, people need to identify with a company’s marketing icon. As an online player, who would you identify with more – a guy who gets up at 6:00am and warms up with 200 laps or a guy who starts his day with a wake and bake.
And on a personal note, I’d like to congratulate my roommate D-Rock on his recent engagement. Seems he popped the question to the lovely Heather in my driveway. Had I known that was going to happen, I would have power washed it or something. He was actually planning to ask her next week and had a whole romantic thing planned, but sometimes things just happen. I attribute it to a case of Valentines Day spillover. Congrats kids.
Photo Notes; Lyle Berman at the 2007 WPT Championship, Brad Berman at the 2007 WSOP, and Andy Beal 20 minutes after he beat Ted Forrest heads-up at the Wynn on February 15, 2006.