Are the numbers derived from what they feel the fair market value of company is at the time the PP's  etc etc are done? Who decides that & is there any oversight etc?

they seem cheap, almost like gifts to the insiders etc participating. 

Would people doing this be privileged with/to more information than what we see or do they only know/see the same information that we have been presented with?

I just don't understand how they could be privey to insider information that we are not should that be the case?