(Reuters) – Overstock.com Inc Chief Executive Officer Patrick Byrne, lashing out at shareholders questioning his sale of a big block of stock this week that sent the company’s shares into a nosedive, said on Friday he had to supplement his “nominal salary” and vowed never to “give such an explanation again.”
In an extraordinary and biting letter to shareholders here, Byrne said he had sold 400,000 more shares in the online retailer and blockchain technology incubator than was disclosed earlier this week. Wednesday’s securities filing here showing he had sold 500,000 shares on Monday and Tuesday. That sent Overstock shares plunging more than 20% over two days, closing on Thursday at its lowest level since October 2012.
In all, he has sold 900,000 “founders shares,” amounting to more than 15% of his stake in the company. The stock, after an initial rally on Friday morning, was 1% higher at $10.21 near midday.
In a letter addressed to investors as “Dear Owners,” Byrne said he was taken aback by the “unanticipated stir” caused by his stock sale.
“Frankly, I had no idea that shareholders would demand explanations of why and how I might want to use my cash derived from my labor and my property to pursue my ends in life,” Byrne wrote, italicizing the word “my” each time.
“Not once have I ever asked a shareholder for his reasons in any decision he made. Yet, given the consternation this has caused, I will give answer, to preclude further recurrence of mass vapors.”
Byrne, the company’s largest shareholder, said he told investors a year ago that he would make “significant sales” of his shares to fund different projects, including blockchain investments. He previously sold about 775,000 shares in transactions last September.
“I simply had to supplement my nominal salary with stock sales in order to fulfill personal commitments to invest personally in blockchain projects such as Medici Land Governance, along with a need to meet charitable pledges such as those outlined above,” Byrne wrote.
“I do not intend to ever give such an explanation again. I owe shareholders staying within the law and not making decisions based on inside information, not explanations of my life and projects outside Overstock,” Byrne said.
He concluded the letter with the valediction: “Your humble servant, Patrick M. Byrne.”
According to the company’s annual proxy statement, Byrne for several years has refused any bonus and has asked that his total compensation be no more than about $100,000 annually. In 2018, his base salary was $96,779 and with holiday pay and “other minor adjustments” was paid a total of $104,231 for the year.
Byrne has pledged about 1.9 million of his 5.8 million shares he owned prior to this week’s sale as collateral for credit from banks, according to the company’s annual report.
Overstock’s shares have fallen about 89% from its record high in January 2018, when the company was benefiting from its plan to launch a digital token and from the hype around cryptocurrencies.