Green Mountain Coffee – The Most Non-Insider Trade in History

This morning, $GMCR (no positions) announced that they’re being acquired for $92/share in cash.  Amazingly, their CEO, Brian Kelley,  filed a form 4 on Friday evening referencing some trades from Thursday Dec 3rd.  Ignore the cutesy “33 Coffee Ln” address…  What we want to focus on is the details (click to enlarge, or click the link):


Kelley, like most executives, receives Restricted Stock Units as part of his compensation.   When these units vest, he owes taxes on the them.   What happens quite frequently, including in this situation, is that the company withholds a quantity of shares equal to the tax liability and sells them.

What’s fascinating here is that Kelley had to know that his company was in advanced talks to be sold.   Another option for holders of vesting RSUs is to send in a check for the tax liability of the shares.   Usually, since the recipient of RSUs has a significant portion of his wealth already tied to the company’s stock, it’s common to just sell a portion of the shares to pay the tax liability.   Kelley presumably could have paid his $1.3 MM tax liability without selling these shares, and he would have realized an additional $900,000 in gains this morning on his position!

Of course, that would probably have looked terrible in hindsight, and probably would have been illegal? (I’m not a tax attorney or a securities fraud attorney – I have no idea.  I think that executives can cancel 10b5-1 plans, but that’s not what this was).

There’s actually another, smaller withholding sale from the day before, too.   But wait – there’s more!  Looking at Kelley’s Form 4s, we can see another 23,986 shares sold on 11/23/15 to meet tax obligations – that’s another $ 1MM + in gains he could have had if he’d paid his tax liability in cash.

Anyway, I thought this was an interesting case of a CEO not pushing the limits of whatever boundaries of insider trading exist, even though he knew he was leaving massive amounts of money on the table.

I’ll leave it up to Matt Levine to determine if Kelley would have gotten in trouble had he paid his tax liability in cash for the trades vesting over the past few weeks…


last year, Kelley satisfied his tax liability the same way – via stock withholding – although perhaps he could argue to the SEC, had he paid his tax liability in cash this year,  that the stock price was significantly higher at that time ($135!), which was why he didn’t want the additional shares at that price.


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