It would have been nice to have a piece of NetSuite’s IPO Thursday when shares of the San Mateo provider of business software services closed at $35.50, up 36.5 percent from its initial public offering price of $26.
Nicer than that, though, would have been to get options to buy shares of NetSuite the week before it went public at a price that was almost half of that. That’s what the company’s chief executive and nine other officers and directors got, according to the company’s final registration statement.
NetSuite, which first filed to go public in July, used an auction process to sell its shares
similar to the one used by Google three years ago. The company’s first estimate of the price range for the offering was filed in an amendment to its S-1 registration form file Dec. 5 and pegged the range between $13 and $16, the halfway point between which just so happened to be the price of the last-minute option grants to NetSuite insiders.
The company raised that initial range two more times before settling on an offering price Wednesday evening that was higher still.
NetSuite CEO Zachary Nelson’s last-minute grant was good for 93,750 shares, which yielded him an immediate $2 million paper profit. It was the second option granted this year to Zachary who was given the right to buy 125,001 shares priced at $12.40 in June, just weeks before the company filed its plans to go public with the SEC. In addition to a grants for 100,000 shares priced at $5, 244,507 shares priced at 70 cents and 19,783 shares priced at 60 cents, Zachary–who joined the company in 2002–also owns 1.56 million shares outright.
By our calculations, his NetSuite stake was worth roughly $76 million at the end of trading Thursday.
Company founder and chief technology officer, Evan Goldberg, also got a last-minute grant equal to Nelson’s. The value of his total options stake, plus the 3.2 million shares he already owns came to $158.6 million at the end of Thursday.
That’s nice, but nowhere near the $1.13 billion worth of shares owned by the company’s premiere shareholder, Larry Ellison. Shares of Oracle, which Ellison founded and for which he serves as chief executive, rose 6.5 percent the same day as the NetSuite IPO, increasing the value of his Oracle shares by $1.6 billion to $25.9 billion.