Form 4: SoundHound AI VP of Engineering Executes Stock Transactions Under 10b5-1 Plan

SoundHound AI's VP of Engineering, Majid Emami, executed multiple stock transactions, including sales and option exercises, under a pre-arranged 10b5-1 trading plan.

Summary

• Majid Emami, VP of Engineering at SoundHound AI, executed several transactions involving the company's Class A Common Stock.
• These transactions occurred on December 6, 2024, and December 9, 2024, and included both the acquisition of shares through option exercises and the sale of shares.
• The transactions were conducted under a Rule 10b5-1 trading plan adopted in August 2024.
• On December 6, 2024, 368,662 shares were acquired at $2.1777 per share and sold at a weighted average price of $15.0006 per share.
• On December 9, 2024, 298,086 shares were acquired at $2.1777 per share and sold at a weighted average price of $15.0381 per share.
• The stock options exercised were granted in exchange for SoundHound stock options from March 28, 2017, and vested 100% at the grant date.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. The transactions are part of a pre-planned trading strategy, which is normal. The sale of shares could be seen as slightly negative, but the gains from the option exercises are positive.

Positives

• The transactions were executed under a pre-arranged 10b5-1 trading plan, which is a common practice for insiders to avoid accusations of trading on non-public information.
• The weighted average sale prices of $15.0006 and $15.0381 per share indicate a significant gain over the exercise price of $2.1777 per share.

Negatives

• The sale of shares by a high-ranking executive could be interpreted negatively by some investors, although it is part of a pre-planned trading strategy.

Risks

• The market may react negatively to insider selling, even if it is part of a pre-planned trading strategy.
• There is a risk that the stock price could be affected by these transactions, although the volume of shares sold is relatively small compared to the total outstanding shares.

Management Comments

• The reporting person hereby undertakes to provide upon request to the SEC staff, the issuer or a security holder of the issuer full information regarding the number of shares and prices at which the transactions were effected.

Industry Context

This type of transaction is common for executives at publicly traded companies, especially those with stock-based compensation. The use of a 10b5-1 plan is a standard practice to avoid insider trading concerns.

Comparison to Industry Standards

• The use of a 10b5-1 trading plan is a common practice among executives at publicly traded companies, such as those in the technology sector like Google (Alphabet), Microsoft, and Amazon, to manage their stock holdings and avoid insider trading accusations.
• The stock option exchange is a common practice in mergers and acquisitions, similar to how companies like Salesforce and Tableau have handled stock options during their merger.
• The weighted average sale prices of $15.0006 and $15.0381 per share are within the typical range for stock sales by executives, similar to what is seen in filings from companies like Apple and Tesla.

Stakeholder Impact

• Shareholders may have a neutral to slightly negative reaction to the sale of shares by a company executive, although the pre-planned nature of the transactions mitigates this concern.
• Employees may view the transactions as a normal part of executive compensation.

Key Dates

Keywords

SoundHound AI, stock transactions, insider trading, Rule 10b5-1, stock options, Majid Emami, executive, share sales