From the company's POV, this is a <i>cashless exercise</i>. Theranos has loaned $25M to Holmes who paid it to Theranos. This is a common structure. Dunno why the WSJ didn't see that.<p>From her POV, she doesn't have <i>beneficial ownership</i>. I think that has tax consequences.<p><a href="http://www.financeandflipflops.com/cash-vs-cashless-exercise-the-stock-option-conundrum/" rel="nofollow">http://www.financeandflipflops.com/cash-vs-cashless-exercise...</a>
I don't think this (loaning a founder or senior exec money to purchase shares) is that uncommon a situation. When my previous start-up employer was purchased, I read through most of the deal docs, hundreds of pages. One of the things they mentioned is that the company floated several promissory notes to the CEO to allow him to purchase more company stock. It was peculiar enough that I made a note of it, but I never stopped to puzzle out why they did it that way. Possibly to avoid a tax liability at the time of the deal? Or to increase his compensation without actually increasing it on paper?