- Steve Ballmer, $2 billion CEO, Microsoft No. of shares sold: 75 million Price: $25.26 - $27.18 When: 10 sales over the course of November 2010 Sold for: $2.0 billion
- Larry Ellison, $1.4 billion CEO, Oracle No. of shares sold: 51 million Oracle shares and 360,000 Leapfrog shares Price: $26.92 - $29.45 and $5.38 - $6.36 When: 71 sales between September and December 2010 Sold for: $1.4 billion
- Ralph Lauren, $860.3 million CEO, Polo Ralph Lauren No. of shares sold: 10.9 million Price: $78.17 - $113.72 When: 22 sales during the year Sold for: $860.3 million
- Jeff Bezos, $793 million CEO, Amazon.com No. of shares sold: 6 million Price: $115.93 - $165.23 When: 30 sales between February and November 2010 Sold for: $793.0 million
- Larry Page, $493 million Co-founder, Google No. of shares sold: 916,674 Price: $403.03 - $630.00 When: 1,241 sales between February and December 2010 Sold for: $493.0 million
- Sergey Brin, $481.2 million Co-founder, Google No. of shares sold: 916,674 Price: $433.87 - $619.39 When: 2,012 sales between February and December 2010 Sold for: $481.2 million
- Marc Benioff, $243.8 million CEO, Salesforce.com No. of shares sold: 2.5 million Price: $61.28 - $149.27 When: 252 sales during the year Sold for: $243.8 million
- Steve Wynn, $103.3 million CEO, Wynn Resorts No. of shares sold: 1 million Price: $103.30 When: Dec. 1, 2010 Sold for: $103.3 million
- John Hammergren, $70.4 million CEO, McKesson No. of shares sold: 2.2 million Price: $61.46 - $70.37 When: 15 sales over the course of June, July and August 2010 Sold for: $70.4 million
- Dennis Wilson, $57.3 million Chairman, Lululemon Athletica No. of shares sold: 1.3 million Price: $38.11 - $71.62 When: 30 sales between January and October 2010 Sold for: $57.3 million
Saturday, April 9, 2011
10 Largest Insider Stock Trades in 2010
Here is some food for thought. Did you ever wonder which ten (10) executives sold their company's stock and cashed in large profits in 2010? Well, if this thought did cross your mind, here goes the answer:
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First thing that comes to mind is whether any of these individuals dumped shares based on upcoming bad news or projections (insider trading)? Any allegations of such against the top ten?
ReplyDeleteAnonymous,
ReplyDeleteThank you for your comments. Often, most if not all of the stock trades that are described in this post happen as a result of programmed or systematic trading on the part of high level business executives. To my knowledge, none of these trades were based on bad news or projections--which you are correct would constitute securities fraud or "insider trading" under Rule 10b-5 of the Securities Exchange Act of 1934.
Thank you for asking for clarity. Indeed, I don't want to infer that these executives engaged in securities fraud or insider trading which is illegal,and hardly advisable for those seeking liberty and freedom in their lives and personal affairs. Insider trading is not good, and often easily detected. Again, thank you for the opportunity to clarify and elaborate further.
I understand that executives buy and sell stocks all of the time, but should someone be skeptical when both co-founders of Google sell such large shares in a relatively short amount of time?
ReplyDeleteThis article highlights the lack of diversity not just in these companies, but in corporate America. The majority of corporations have "diversity" policies; however, there are so few women and minorities that are CEOS (or even on boards of directors).
ReplyDeleteAlthough Title IX has given women greater opportunities in the athletic arena, where are the greater opportunities for women in corporate America? Where are the role models for young women and young minorities in corporate America? It is time the corporations stop espousing their grandiose diversity policies and start to implement the diversity policies at the top echelons of the corporate leadership.
- Lara O.
The fact that the list of the ten largest insider stock traders of 2010 consists of ten white men should come as a surprise to nobody who has any knowledge of the current world and American business climates. Is a list of ten even large enough to draw justifiable conclusions about the position of women and people of color in modern corporate America? I do not think that it is. In fact, considering that the overwhelming vast majority of Chief Executive Officers, Company Presidents, and members of Corporate Boards of Directors are white men, it should come as a surprise to no informed person that ten white men were able to capitalize, totally legally, on their positions in their respective companies and achieve further financial success. Over the past decades, there is absolutely no doubt at all that women and people of color are achieving greater roles in corporate America and are entering into an era of being more adequately represented on corporate boards and in executive positions. A transition to total equality in this area most likely will never happen; it certainly will not happen overnight, nor, necessarily, should it happen just for the sake of equality. Qualification for the position and financial and business acumen should be the ultimate factors that decide who rises to the top of corporate America. These ten white men have inside knowledge and a dedication to a continuing knowledge of both their own individual companies and the financial markets so that they themselves may become wealthier and their respective companies may prosper and grow, to the betterment of American society generally. What could more closely parallel the American dream? No negative conclusions should be drawn about the laudable accomplishments of these ten men. Who among us would do anything different from what these men have done if given the same opportunities and if provided with the same knowledge of the inner workings of these companies? The answer is few if any. The relevance of this list to an overall generalization about the role of women and people of color in corporate America is minimal at best.
ReplyDelete- Miles B. Berger
I can definitely relate to what Lara and Miles have said on the issue of lack of diversity in the Corporate America world. My thoughts on the matter are the following: First, lack of diversity has been an issue across the board, from the government sector to the non-profit sector, as well as in the corporate sector. Second, Minorities tend to look at jobs that will allow them to give back to their communities in a way that a CEO may or may not be able to do (such as doctor, lawyer, and teacher). And third, historically there weren’t as many opportunities available for diversity in the business; however, I think the corporate world has room to refocused on the issue of diversity, and the demand for diversity talent is as high as it’s ever been now. I personally think the role of diversity in corporate America is important. Consequently, corporations need to work harder on tackling this lack of diversity in our Corporate America world.
ReplyDeleteMarianne Monkam, Bus Org
These seem to be extraordinary payouts. What do these guys know that the market does not?
ReplyDeleteMr. Ramirez,
ReplyDeleteI don’t think it’s a matter of “what do these guys KNOW that the market does not” so much as “what do these guys HAVE that the market does not.” And what they have are stock options as part of their compensation package: the option to buy thousands (or even millions) of shares at a (low) price point frozen in time, regardless of what the market does.
Also, what’s a little confusing about the information given is that we don’t know at what price point the shares were purchased, making it difficult to know the net profit. But still, I think it’s safe to assume that the CEOs on the list came out juuust fine…
- Greg E. - UC
As Greg E. stated, it is difficult to know the profit of these trades because we don’t know at what price point the shares were purchased. However, I find it interesting that out of these 10 largest insider stock trades in 2010, only Larry Ellison ranks in the top ten for the highest paid CEO’s of 2010. He came in at #3, making $70.1 million. The highest paid CEO of 2010 was Philippe P. Dauman, President and CEO of Viacom, Inc. As the earnings were mostly healthy in 2010 and the stock market has rebounded somewhat, CEO’s were receiving larger bonuses and reporting larger compensation packages overall. I would think that with such large trades to make the 10 largest insider stock trades list for 2010, these ten executives have helped to increase their companies’ stock prices by fairly large margins, which would most likely have resulted in high compensation packages.
ReplyDelete- Ryan K.
Bus. Org.
First, I agree with the comments above that this illustrates a lack of diversity of CEOs and executives.
ReplyDeleteWhen I first read this article, I immediately took the defense of these executives. However, after re-reading, I realize that this article is simply stating facts. These executives simply sold shares of their company, legally, making very large profits. If anyone is interested in why these executives made these sales, please read below for my hypothesis.
I'll examine the Google execs because I am somewhat familiar with that company. Page and Brin were co-founders of the now-enourmous internet company. Although I do not know the exact figures on the percentage of ownership, I assume that each retained a substantial percentage of ownership in the company when going public.
Google has 321.52 million shares outstanding (4/20/11). Page and Brin each sold 916k shares, which calculates to about 0.28% of the total shares outstanding. Accountants usually set materiality for financial statements around 5%. So by accounting standards, the sale would have to be about 20X larger to reach a "material" threshold. This illustrates that even though the execs made 400+ million on these sales, it was actually a drop in the bucket of the total value of outstanding Google shares.
Page and Brin are worth billions each. I presume that a large amount of their net worth is held in securities. I submit that this sale was in large part to further diversify their holdings. They sold their Google shares and reinvested in other companies to allocate their risk across a broader spectrum. Although Google is viewed by many as a smart investment, it is never wise to put all of your eggs in one basket.
Further, because of the uncertainty of the future of the long-term capital gains tax rate, Page and Brin likely wanted to lock in their substantial gains at the 2010 level of 15% (in 2013, their gains would be taxed at 20%). Many speculate that the rate will rise beyond 2013; this risk is attributed largely to political uncertainty. Because both probably had very low bases in the stock, due to stock options and an initial IPO price of $85, the capital gains were likely extremely high. Even if the capital gains on the sale were only at 300 million - and I bet they were much higher - Page and Brin saved $15 mil each in taxes by cashing out at the 2010 rate rather than the 2013 rate.
S. Andrew Stonestreet
First, I agree with the comments above that this illustrates a lack of diversity of CEOs and executives.
ReplyDeleteWhen I first read this article, I immediately took the defense of these executives. However, after re-reading, I realize that this article is simply stating facts. These executives simply sold shares of their company, legally, making very large profits. If anyone is interested in why these executives made these sales, please read below for my hypothesis.
I'll examine the Google execs because I am somewhat familiar with that company. Page and Brin were co-founders of the now-enourmous internet company. Although I do not know the exact figures on the percentage of ownership, I assume that each retained a substantial percentage of ownership in the company when going public.
Google has 321.52 million shares outstanding (4/20/11). Page and Brin each sold 916k shares, which calculates to about 0.28% of the total shares outstanding. Accountants usually set materiality for financial statements around 5%. So by accounting standards, the sale would have to be about 20X larger to reach a "material" threshold. This illustrates that even though the execs made 400+ million on these sales, it was actually a drop in the bucket of the total value of outstanding Google shares.
Page and Brin are worth billions each. I presume that a large amount of their net worth is held in securities. I submit that this sale was in large part to further diversify their holdings. They sold their Google shares and reinvested in other companies to allocate their risk across a broader spectrum. Although Google is viewed by many as a smart investment, it is never wise to put all of your eggs in one basket.
Further, because of the uncertainty of the future of the long-term capital gains tax rate, Page and Brin likely wanted to lock in their substantial gains at the 2010 level of 15% (in 2013, their gains would be taxed at 20%). Many speculate that the rate will rise beyond 2013; this risk is attributed largely to political uncertainty. Because both probably had very low bases in the stock, due to stock options and an initial IPO price of $85, the capital gains were likely extremely high. Even if the capital gains on the sale were only at 300 million - and I bet they were much higher - Page and Brin saved $15 mil each in taxes by cashing out at the 2010 rate rather than the 2013 rate.
S. Andrew Stonestreet
I have to wonder how many of these stock sales were conducted by deputies of the CEOs (and not by the CEOs themselves). I know these are some pretty big numbers, that the individual would certainly want to approve in the aggregate, but does #2 Larry Ellison really have time to pursue 71 sales between September and December 2010? Or is this largely the work of his deputy? If so, who should be more concerned about who is actually running the show: us, or Larry Ellison?
ReplyDeleteI do not think there is any surprise that the list only contains white males, but I also agree with Lara's comment regarding the diversity policy. In class we were assigned to find a corporation's diversity policy and check the Board and see if it is line with the policy - the corporation policy I looked into had a policy about women, racial minorities, and different sexual orientations. The make up of the Board was completely white males. Corporate America is not diverse by any means, but hopefully in the future with more opportunities available to all the make-up will begin to become more diverse.
ReplyDelete--Rebecca S.
Bus. Org.
Has anyone read this article http://management.fortune.cnn.com/2011/04/28/why-do-men-outperform-women-at-harvard-biz-school/ on the gender gap at Harvard Business School? A recent study shows that HBS has more male honor students than female honor students yet, women placed a higher importance on academics, and spending time preparing for class.
ReplyDeleteThe study suggests that the gap is due to women not feeling as comfortable with class participation as men and because participation accounts for a large portion of a student’s grade, women are less likely to be successful at HBS. As an outspoken women myself, I doubt that a woman who works her way into HBS is too timid or shy to participate in a class discussion.
The article also points out that the percentage of women who teach at HBS is far below the percentage of women enrolled as MBA students in every professional category. Perhaps the lack of female professors at HBS (17 women out of 93 total professors) signals that other factors might be at play. Thoughts?
On a positive note, Fortune’s annual ranking of the 50 most powerful women in America, (available at http://money.cnn.com/magazines/fortune/mostpowerfulwomen/2010/ ), might provide a little comfort for the female readers out there.
Professor Grant,
ReplyDeleteAlthough, most of the stocks sales were probably planned sales, it would be interesting to check the date of each of these sales and then see what happened to the stock over the next quarter to see whether there was a particular reason that the insider chose to sell on that date (and a possible 10b-5 violation).
- Joseph Z.
- U.C.
10b-5 violations are nothing to take lightly. They not only defraud traders and stockholders in a corporation, but they also have a larger rippling effect on commerce, as they deter people from investing, which effects a corporations worth and their ability to generate revenue and invest in new avenues.
ReplyDeleteI find this post intriguing b/c it is questioning whether there is a correlation between gender/race and the buying and selling of stocks at "opportunistic times" - I agree that questions like this should be pursued and answer should be sought out. Although I do not think that just b/c these traders were all white males these means anything. As previous posts have pointed out - it's likely a product of the circumstance (i.e. corporate America and who holds the reins).
Yet, this post got me thinking about what correlation there may be, as alluded to, between findings of insider trading and the LARGER economic impact that such occurrences really have. We all know that it deters market investment, but what larger impact does it have?
While I would presume that some studies have been done to answer this question, I think the public could benefit from have ready access to this information, and that "public shaming" [by illustrating the broader impact 10b-5 violations have] could be one helpful to deter such illegal conduct.
Yes, it would definetely be intersting to see what happened to the stock market in the following weeks after these guys sold their stocks. I guess it was the right decision in most of the cases...
ReplyDelete