Breaking Update: Court Unseals Potentially Devastating Testimony-Romney Said Stocks Sold at 1/10th

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77. I'm curious as to whet her you've read the transcript.

I spent several hours last night going through it. From my reading of it, Ms. Stemberg got around 500,000 shares of stock as part of the divorce settlement, representing 1/2 of the stock her husband owned. Her husband's common stock was not freely transferrable -- it was subject to certain limitations placed on it because of his position in the company. Only a portion of it could have been transferred to her and absent some action by the board of directors, she would still have been limited in what she could do with those shares. The testimony indicates that rather than lift the restrictions, the company came up with the plan to have a portion of the husband's common stock converted into a new class of securities (Preferred Class D). The testimony indicates that because of various different preferences and restrictions, each class of stock at that time was valued differently, with the freely transferrable shares Common Stock and the freely transferable Class D being valued at essentially the same level. That this was so reflected in part the fact that the Class D could be automatically converted into Common at any point in time and would, in any event, be converted into Common stock (as would other preferred classes of stock) upon the issuance of an IPO.

In short, the stock she got, at the time she got it had the same value as the stock her husband had. Indeed, her stock arguably was more valuable than what he had since her's was immediately transferrable and his wasn't. Shares of Class D stock were sold to a group of Kuwaitees for $2.25 share in February 1988. Its unclear from the transcript whether those were newly issued Class D shares or Ms.Stemberg's shares. In any event, its still hard to see how she was screwed insofar as the choice would have been to have shares she couldn't transfer or shares that she could and did transfer, just at a time and price when they weren't worth as much as they would have been had she held onto them. The irony, I suppose, is that if she had been able to take the shares with the restriction on sales, she wouldn't have been able to unload them and thus would still have had them when they were converted to freely transferrable Common at the time of the IPO. Of course, she wouldn't have been able to pay off her mortgage when she wanted to. In short, from the transcript, I can't see any evidence of her being screwed. It would be interesting to hear what she has to say and thus i would like to see the gag order lifted. Maybe that would cast Romney's role, which seems pretty limited based on the testimony, in a different light. But for now, I don't see anything on the face of the testimony that suggests that Ms. Stemberg was a victim of anything other than bad timing.