Why have 2 DroneShield directors sold off 10 million of their shares in the past fortnight?

The DroneShield Ltd (ASX: DRO) share price has been on a ripper run lately. Therefore, it might be easy to assume two directors offloading notable stakes in the company did so to cash in gains. However, there's more to the story.

The DroneShield share price is currently 32 cents. While that's 4.5% lower than it was at Wednesday's close, it's also 78% higher than it was this time last month.

For comparison, the benchmark All Ordinaries Index (ASX: XAO) has lifted 0.4% today and 4.3% over the last 30 days.

So, why have CEO and managing director Oleg Vornik and chair Peter James sold millions of DroneShield shares in the last fortnight? Let's take a look.

Why have DroneShield directors been offloading shares?

There was a selling spree among DroneShield directors earlier in January, with Vornik and James selling more than 10 million shares between them.

Vornik offloaded approximately 7.2 million shares for a total of around $1.9 million – representing an average price of around $26.38 apiece.

James, meanwhile, sold 3 million shares for a total of $796,690 – or approximately 26.56 cents apiece.

And that was a decent price compared to the stocks' recent lows. If the pair made the sales in late December, they may have received just 17.5 cents per share.

But it wasn't profit-taking that apparently led the directors to each offload a sizeable chunk of their stake in the company.

According to ASX statements detailing the sales, "a substantial part of the proceeds is towards meeting [Australian Taxation Office (ATO)] tax obligations associated with issue of DroneShield securities".

If that sounds familiar, it's probably because it is. Indeed, in June 2022 Vornik and James offloaded a combined 2.65 million stocks for 20.7 cents apiece for taxation reasons.

Following their latest sales, Vornik holds 8 million DroneShield shares – approximately 1.8% of the register – and James holds 6.3 million – or around 1.4% of the company, according to ASX data.

The stakes they sold this month represented 28% and 20% of their respective fully diluted stakes.