culture, politics, commentary, criticism

Thursday, January 05, 2006
When CEOs sell. Because they are the ultimate insiders, sales of stock by companies' CEOs can be viewed as a weathervane of where the company is going. After all, Skilling and Lay sold big before Enron tanked. Do recent insider sales mean that Halliburton's doom is near?
Barron's, sub. only:
Hallibuton's shares have surpassed highs hit five years ago thanks to rising energy prices. And lucky insiders have been guzzling up the profits.

Company insiders sold $24 million in stock in the fourth quarter, eclipsing the five-year average of $5.9 million for this period, according to data from Thomson Financial. [...]

Insider selling spiked in July, September and December, when the stock tested five-year highs, notes Mark LoPresti, senior quantitative analyst at Thomson Financial. [...]

In 2005, five senior executives sold nearly a million shares for roughly $55 million in 2005, eclipsing sales of 154,000 shares for $5.9 million the previous year, according to Thomson data.

Andrew Lane, chief operating officer, Bert Cornelison, general counsel, and Mark A. McCollum, chief accounting officer, are among the executives selling shares. [...]

David Lesar, chief executive officer, has been the most aggressive seller. He pocketed $6.9 million last month by selling 107,000 shares after exercising options on most of them. The options were priced between $31.55 and $51.50, and the sales were conducted under a fresh trading plan Lesar adopted in August.

This year, Lesar made more than $46 million selling nearly 778,000 shares -- about 70% were options-related sales -- since he started selling in April. Even so, he continues to maintain a stake of just under 700,000 shares with the help of option grants. [...]

"[T]his guy is getting pretty fat option grants," says [Harris Hall, director of equity research at Singular Research]. This is a "classic example of the company that is getting sweetheart deals from the government and insiders are making out like crazy."
Note that $46 million for one man in one year is a non-trivial amount of money. That's more than twice the amount of cold cash that Jack Abramoff siphoned from Indian tribes and stashed in his secret accounts.

Oy vey! How I yearn for the scandalous days of Whitewater and blow jobs.

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