SiliconBeat

We took two top executives at eHealth to task back in August when we noted that neither its chief executive, Gary Lauer (he’s the gentleman in the center of this photo from Nasdaq), nor its chief financial officer, Stuart Huizinga, owned any shares of company stock, despite having made millions exercising options and promptly selling them.
Well, Lauer now has something in common with other eHealth shareholders: He actually owns shares of the Mountain View Internet seller of health insurance.

We noticed on the Form 4 used to report his most recent option flip that the box listing his ownership stake no longer had a zero in it. It listed 42,353 shares.
So where’d they come from? It seems that, as of Feb.‚13, Lauer is now in possession of restricted shares that will vest in four equal installments over four years, if he sticks around.

Compare that with Huizinga, eHealth’s CFO. He became a company owner for the first time a month before Lauer, and he did it the old-fashioned way: buying and holding. True, the shares he bought were part of options priced at $2 per share, but rather than sell all of the 25,000 shares he exercised Jan. 2, he kept 20,000 of them.

That means Huizinga has shared some real pain with other stockholders as eHealth shares, which rose 60 percent last year, have dropped about 20 percent so far in 2008.

Back in 2007, Lauer made more than $6 million when he exercised his option to buy 295,000 eHealth shares priced before the company’s October 2006 initial public offering and then sold them the first chance he could. That was just over a year ago, when the ”lockup period” — typically a 180-day period after the IPO when company insiders are not allowed to trade — expired.

Since then, Lauer — who made $480,000 in salary and bonus in 2006 plus more than $135,000 in perks for housing, car, airfare, entertainment and taxes — increased his haul from from flipping options to more than $14 million. By our count, he still holds about 1.5 million shares in option grants priced at $2 each, which would net him $35‚ million more.

But stock options have no real down-side risk, and they are an imperfect substitute for real share ownership by employees, according to compensation experts such as Ira Kay at Wyatt Watson. He testified before Congress in 2002 about research showing that companies with large amounts of executive stock ownership perform better than companies with low executive stock ownership.