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Griffiths
Martin Griffiths, CFO of Stagecoach (SGC 275p) is taking his money off the table.
As at the beginning of June he held Executive Share Options over 479,000 shares, with varying exercise periods, starting in June and December 2006 and December 2007, and extending mostly to June 2010, with some as far out as December 2011 (Annual report).
Griffiths exercised all 479,000 between 26th of June and 8th July this year, which cost him £365k.
He sold all of them them on the same dates, realising £1379k, a net £1m in his pocket.
Why do I think this significant?
- He had another 2-3 years before he needed to exercise these options, but chose to exercise and sell now.
- This 479,000 shares is the total amount in his Executive Share Option pot*. Griffiths today owns less than 20,000 shares.
- When exercising options, directors usually sell sufficient to pay the tax man and hold on to the rest. Not in Griffiths case. He has exercised and sold the lot.
Griffiths behaviour and the subsequent risk profile of his remaining ‘Plan’ shares indicates to me that the risks to the Stagecoach shares outweigh the medium term returns. So I’d follow Griffiths and take some money off the table too.
*Griffiths also owns 166,000 in the Executive Pension Plan (vestable mid ’09 and mid ’10), and the equivalent of 675,000 in the Long Term Investment Plan, but these are subject to Total Shareholder Return criteria as detailed in the Annual Report, and designed to be taken in cash not shares, so you may not find out whether they have been exercised until the next Annual Report.
References:
Stagecoach Annual Report 2008, pp 35-38
In my post of March 6th: ‘3i CEO Philip Yea buys back £1/2m worth of shares’ I commended Philip Yea for his expertise in trading in his own company stock, 3i.
Note now that on July 14th Yea sold 60,831 shares at 823.5p, taking £500k off the table, leaving him with a residual 275,000 shares.
From March 6th to date 3i (III, 930p) are up 22% relative to the FTSE 100.
Time to take profits then. Thankyou Philip.
On April 3rd I highlighted Mr Walshes last sale of Diageo (DGE, 1047p) shares (see commentary here).
I was particularly impressed with the fortuitous timing that Mr Walsh seemed to have shown with his previous share disposals.
Since April 3rd, Diageo shares are down 1% absolute, or down 6% relative to the FTSE.
I see no reason that May 9ths sale by Paul Walsh of 125,000 shares at 1040p shouldn’t be a continuation of either his good luck or expert timing.
There’s a plethora of information about directors share dealings in Cairn Energy ( CNE, 2915p) last week.
If you filter out the sales by executive directors of shares released under the Long Term Incentive Plan, and eliminate shareholdings sold and bought back before CGT changes, you are left with four notable changes in holdings:
1. CEO Sir Bill Gammall has sold 50,000 shares taking his holding to 377,000 shares.
2. Exploration Director Dr Mike Watts sold 40,000 shares taking his holding to 160,000 shares.
In my mind both of the above sales are interesting but not hugely significant.
Of greater interest are the sales by Non Executive Directors as follows:
3. Non executive Chairman Norman Murray halves his holding by selling 40,000 shares at £28.61, releasing £1.1m, and
4. Non executive Director Todd Hart reduces his holding by more than a third, selling 10,000 shares to leave him with 18,000.
I believe these sales to be significant, both in value terms, and as a proportion of the directors’ position (holding) in Cairn prior to the sales.
Source: http://www.Digitallook.com
I see Paul Walsh, CEO of Diageo (DGE 1055p) has sold just under a million pounds of shares, resulting from an options exercise the same day.
Looking back, he always sells pretty much all the shares he receives as a result of exercising his options, not just a portion sufficient to pay the tax, so behaviourally this is no change from previous sales.
What I did notice though is that he has been very clever at hitting all the peaks in the Diageo share price chart over the last two years.
To best see this, go to digitallook.com, search for diageo, draw a chart, and overlay directors dealings.
The chances are that he’s done it again this time, and 1055p may well be the recent peak of Diageo for a few months.
Like any transaction with a bank, you need to read the fine print before deciding on the merits of the offer.
Now that HBOS have released details of their directors purchases (why didn’t they tell us on Thursday?), I have changed my opinion as to the significance of these directors dealings.
1. The Bank EXPECTS executive directors to [buy shares] have meaningful shareholdings. ‘Every year since 2002 all incentive outcomes earned by all Executive Directors have, at their choice, been taken as HBOS shares, rather than cash’. The shares bought last Thursday were paid for using the net bonus paid to directors.
2. The increase in share positions is small, averaging only 16% of their pre purchase position in HBOS, wioth the exception of Jo Dawson, who increased her position by 49%.
3. The investments just made can be increased by up to 200% by the bank, dependent on real eps performance over three years. So these guys could be buying shares at 150p if they perform!
‘Executive Directors may receive up to 200% enhancement (250% for the CEO) of such shareholding dependent on growth in eps over three years in excess or RPI. 0% pa eps growth over RPI = 0% additional shares. +3% = 100% additional. +6% = 200% additional.’
My conclusion and revised opinion:
If the executive directors hadn’t bought shares in HBOS then that would have been something of concern. The fact that they did is in my view, and the view of the Bank, normal and expected behaviour. So the purchase on Thursday is in the normal course of business, and should not be taken as a positive message by investors.
For further details on remuneration policy see pp126-128 in the hbos plc 2007 Annual report and Accounts: http://www.hbosplc.com/investors/results/ARA_2007/downloads/HBOS_ARAreduce.pdf
I was intrigued to see, on the 13th March, Roy Gardner, Chairman of Compass group PLC (CPG, 309p) putting £200k to work (25,000 shares at 310p). I looked at managements track record with investing in their company, and found them to be pretty successful- no great blunders, but not trading in and out either.
I decided then that Compass Group should be watched. And hey presto, my inbox today shows the CEO Richard Cousins increasing his stake by 20% by buying 50,000 shares at 301.25p, investing £300k.
News ahead? Maybe a reassuring comment at the Trading Update on March 27th (see financial calendar).
See also ‘The Compass points South‘ February 8th 2009.
3i Groups (III, 820.5p) CEO Philip Rea has ample experience in dealing in his companys shares. Experience that is worth noting.
In May/June 2006 he bought 30,000 shares at an average price of 830p
In August 2007 he sold 76,203 shares at 1070p.
And now, on March 4th 2008, he is seen buying 60,000 shares at 809p
In the Interim management Statement of January 24th, Yea stated: ‘Our mid-market position and the depth of our international network have allowed us to continue to source good investment opportunities notwithstanding the more difficult economic outlook.’
If there is one person who knows what is going on on the ground, in terms of the economic performance of the companies 3i have invested in, then it’s Rea.
Reas purchase of 60,000 shares takes him to 336,000 shares, so this is what I would deem a significant investment in proportion to his current holding in the company. I’d like to see a few other directors lifting their stakes too.
But because Rea has his ear to the ground, I see this as a vote of confidence not only in 3i, but also in the broader market.
For all posts on 3i click here.
followthedirectors... a study of directors share dealings 