Should You Be Concerned by the Stock Giveaways at Molycorp Inc.?

Two board members close 2013 with generous grants.

Jan 31, 2014 at 6:05PM

Insider stock giveaways at Molycorp (NYSE:MCP) look worse than they are, Fool contributor Tim Beyers says in the following video.

They aren't big, per se, they just aren't tied to any sort of performance metric. Instead, board members Russell Ball and Mark Kristoff received 2,196 and 4,027 restricted shares, respectively, for their service to the company in 2013.

Yet the story doesn't end there. Looking at the footnotes of each Form 4 filing, it appears that Ball and Kristoff took the shares in lieu of cash compensation they'd otherwise be owed as participating members of the miner's board. Molycorp elected to match 25% of their conversion in additional restricted shares vesting over three years.

Is that a good sign? It's certainly not a bad sign, Tim says, since stock is the company's best currency at the moment. Molycorp, burdened with more than $1.3 billion in long-term debt, isn't yet generating consistent free cash flow.

Now it's your turn to weigh in. What do you think of the stock giveaways at Molycorp? Please watch the video to get Tim's full take and then leave a comment to let us know whether you would buy, sell, or short Molycorp stock at current prices.

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He didn't own shares in any of the companies mentioned at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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