Blackboard: Let's Follow the Money Part I

Are you a Blackboard customer? Do you know how much your institution pays in license and support services fees? And where might that money be going? Let's follow the money.

All public companies are required to report Insider Transactions (i.e. buying and selling of securities by company officers from the company's treasury). If one looks at the insider transaction activity over the past six month by Blackboard officers, we find 25 "sell" transactions of 272,186 shares and only 1 "buy" transaction of 2,500 shares. What does that tell us? Maybe something. Maybe nothing.

Mr. Chasen alone cashed out with a whopping $6,500,000 in stock options during the first eight months of this year. Not bad at all. Nothing illegal. Nothing untoward. All above board. These were also almost all "automatic sales", which I think means that Mr. Chasen's securities were bought and sold based on preset triggers in the stock price.

The interesting thread here is not that Blackboard's officers are selling their stocks, but the staggering amount of compensation and windfall Blackboard officers are enjoying this year in the form of stock options.

Let's also take note of  Blackboard's relative investment in R&D compared to overall compensation for its top officers, including  stock options. The company spent 13.21M, 10.27M, 11.40M, 13.75M, and 13.95M in R&D for the years 2001, 2002, 2003, 2004, and 2005 respectively. Over the same period as R&D stayed relatively flat, Net Sales increased from 46.73M in 2001 to 135.66M in 2005.

If Mr. Chasen's cash out pattern continues this year his compensation alone could come close to Blackboard's entire spend for R&D.

If you are a Blackboard customer, shouldn't you be asking where your money is going? How much of your spend is coming back to you through re-investment in the platform and how much of it is lining the pocket books of a handful of top officers? To be fair to Mr. Chasen he is not a mere officer but one of Blackboard's original founders.