Did top execs at Lucent Technologies Inc. (NYSE: LU), including ousted CEO Richard A. McGinn, redeem hundreds of thousands of stock options worth millions of dollars this fall -- before the shares lost much of their value?

Yes, in short, though Lucent officials haven't exactly been forthcoming about the insider sales that took place in September.

Here's the situation: A variety of online financial information services, including Yahoo, Webcrawler, and Stockpoint, first reported that on September 1, 2000, several top Lucent executives sold about 288,697 shares of common stock worth about $12.2 million back to Lucent in a series of "non open market sales." These sales took place when the stock was worth $42.59 per share, just prior to its freefall to less than $20 per share. (Lucent's share price this afternoon was $17.56.)

Some shareholders have written to Light Reading, angry that Lucent executives were able to sell their shares before the collapse.

"They always seem to know when to unload, and we don't. This is wrong, and it hurts the little guy," says B.L. Cork, a consultant in Omaha, Nebraska. "As a Lucent retiree, I can't afford to cash in my shares." Cork obtained his information on Webcrawler, he says.

Light Reading has since acquired the appropriate documents from the SEC, which were filed manually and were not available to the general public online.

For its part, Lucent denies there's anything unusual about the transactions. Spokespeople for the company say the shares in question were issued to the executives on September 1 as part of a vested compensation plan. Big companies often reward their executives with vested stock options. The recipients then have a range of choices: They can use the stock awards to pay income tax on the shares, move them to 401Ks, give them to someone else, or just cash them out. The kind of in-house stock sale involved to achieve this is not the same as selling shares on the open market.

And it looks like this kind of inside sale is just what the executives did with their shares. For instance, Arun F. Netravali, president of Bell Labs, allocated the value of 33,389 shares to what the SEC terms "payment of exercise price or tax liability by delivering or withholding securities..." Donald K. Peterson, president and CEO of Lucent's Enterprise Networks Group, did the same thing with 44,518 shares. And Rich McGinn allocated a whopping 111,342 shares the same way. Other execs who performed similar transactions were John T. Dickson, executive VP and CEO of Lucent's Microelectronics division (27,468 shares); James Lusk, senior VP and controller (10,103); and William T. O'Shea, executive VP of corporate strategy and business development (44,518).

Analysts confirm the pedestrian nature of the filings. "I don't see anything unusual in the forms," says Alan Bezoza, analyst with CIBC World Markets. "It's worth keeping an eye on inside trading, but there's nothing here that signal's anything except a run-of-the-mill stock transfer."

What is unusual is that Lucent seems bent on keeping the filings under wraps. The manual filing makes it tougher for shareholders, analysts, and reporters to get the information easily. Also, the company refused to fax any but one "sample" form to Light Reading. (We subsequently purchased copies of the forms from Thomson Financial's Primark division.) And when we asked Lucent to respond to the impression some readers had taken away from the Web that executives were cashing in huge amounts of stock unbeknownst to other shareholders, the company said only that what appeared online was the "interpretation" Yahoo and others had put on the information.

Why is Lucent so reluctant to explain the situation?

The answer may lie in the information that the SEC filings disclose about the large volume of compensation awarded to specific execs. McGinn, for example, is shown as owning 594,125 shares of common stock at the end of September -- stock that at the time was valued at over $25 million. Netravali owned more than 300,000 shares; Peterson and Dickson each owned more than 200,000 -- a combined value at the time of over $30 million.

Big bucks by any standard. At the very least, analysts say, the fact that McGinn had so much common stock in play could now be embarrassing to Lucent, in light of his subsequent ouster (see McGinn: McGone) and revelations that he invested in competing companies (see McGinn Backed Lucent Competitor).

It's also a poor reflection on the company that its top brass was liquidating their shares at the time, even if it was to pay taxes. Shareholders often look to insider activity as a gauge of how much faith the management has in its own products and direction. When the CEO of Nortel Networks Corp. (NYSE/Toronto: NT) recently purchased over $1 million in stock, for example, it was perceived as a vote of confidence (see Roth Bought Nortel Shares ).

Several class-action lawsuits have been filed against Lucent recently by shareholders claiming various misdeeds relative to its securities. These include motions filed in New Jersey by lawyers from the firms of Schiffrin & Barroway LLP, Cohen Milstein Hausfeld & Toll PLLC, and Cauley & Geller LLP. Most of these suits pertain to alleged misleading information about the true financial status of the company earlier this year.

Analysts say the lawsuits also are business as usual. "Whenever you get a company losing as much value as Lucent, the striped-suit guys come out of the woodwork," said one Wall Street analyst, who asked not to be named. "It means absolutely nothing about the value of the stock. Anyway, if the Lucent management really did these things, they deserve to be taken to the woodshed."

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com