By Susan Pulliam, Coulter Jones and Andrea Fuller
Top executives at U.S.-traded companies sold a total of roughly
$9.2 billion in shares of their own companies between the start of
February and the end of last week, a Wall Street Journal analysis
shows.
The selling saved the executives -- including many in the
financial industry -- potential losses totaling $1.9 billion,
according to the analysis, as the S&P 500 stock index plunged
about 30% from its peak on Feb. 19 through the close of trading
March 20.
The Journal examined more than 4,000 regulatory filings related
to stock sales between Feb. 1 and March 19 by corporate officers of
companies traded in the U.S. Avoided losses for the seller are
based on the change in the value of each stock between when it was
sold and March 20.
By far the largest executive seller was Amazon.com Inc. Chief
Executive Jeffrey Bezos, who sold a total of $3.4 billion in Amazon
shares in the first week of February, shortly before the stock
market peaked, allowing him to avoid paper losses of roughly $317
million if he had held the stock through March 20, according to the
Journal analysis.
The sales represented roughly 3% of Mr. Bezos's Amazon holdings,
according to the most recently available regulatory filings. He
sold almost as much stock during the first week of February as he
sold during the previous 12 months.
Amazon didn't immediately provide a comment on behalf of Mr.
Bezos.
There is no suggestion that the executives sold shares based on
any inside information. The stock market hit an all-time high in
February, and executives often sell shares early in the year for
tax and other reasons, including preset trading strategies. But the
amount of stock sold by executives and officers of U.S.-listed
companies was up by roughly one-third from the comparable periods
in the previous two years, according to the analysis of regulatory
filings and data from S&P Global Market Intelligence.
During the same period in February and March of 2019, corporate
officers sold about $6.4 billion worth of stock
While Mr. Bezos's sales accounted for more than a third of the
2020 sales, thousands of other insiders sold stock. More than 150
executives and officers individually sold at least $1 million worth
of stock in February and March after having sold no stock in the
previous 12 months, the Journal analysis found.
Wall Street executives also sold large dollar amounts, including
Laurence Fink, CEO of BlackRock Inc., who sold $25 million of his
company shares on Feb. 14, pre-empting potential losses of more
than $9.3 million, and Lance Uggla, CEO of IHS Markit Ltd., a data
and analytics firm. Mr. Uggla sold $47 million of his shares on
Feb. 19, shares that would have dropped in value by $19.2 million
if he had retained them. A spokesperson said the shares were sold
under a preset plan.
A spokesperson for BlackRock said Mr. Fink's sales were a small
percentage of his holdings and that he sold $18 million in stock
around the same time last year. The sales were about 5% or less of
Mr. Fink's BlackRock holdings, according to his latest filing.
Some of the nation's most vulnerable industries are reeling
because of the coronavirus pandemic, and the trading by top
executives meant less in the way of personal stock losses.
Recent state government orders to limit gatherings have all but
shut down some industries, and it is unclear how the public will
react even when those lockdowns ease.
Some of the selling was prompted by government-sanctioned
trading plans, known as 10b5-1 plans, that allow corporate
executives and directors to set in advance the sale of stock for
certain prices or dates.
The stock market's plunge may have triggered some plans,
depending on the details, says Adam Epstein, who advises companies
on corporate governance practices.
"What doesn't change -- even if there is such a plan -- is that
optically from an investor's perspective it is always bad for
investors when CEOs sell shares," Mr. Epstein said. He advises
chief executives to construct their investment portfolios so they
aren't forced to sell shares in order to raise cash if their
company's stock falls sharply.
Some of the executives who sold stock came from industries most
battered by the economic crisis. James Murren, outgoing CEO of MGM
Resorts International, sold $22.2 million of his company's stock,
staving off a possible $15.9 million loss. The company's shares
closed at $9.11 on Friday, down 73% from their February high.
Mr. Murren sold the shares, around the market peak, on Feb. 19
and Feb. 20. A spokesperson noted that the sales came one week
after Mr. Murren announced he was leaving MGM. On March 22, Nevada
Gov. Steve Sisolak tapped him to lead the state's response to the
coronavirus outbreak.
Among the executives who sold stock this year but not last year
was Marc Rowan, co-founder and director of Apollo Global Management
Inc. He sold $99 million in February and early March, avoiding
paper losses of about $40 million. A spokesperson pointed to an
Apollo public filing that described a plan, put in place last fall,
allowing Mr. Rowan to sell shares.
Last week, several members of Congress, their spouses and
investment advisers drew fire because they sold stock after the
lawmakers met to discuss the threat of coronavirus.
Sen. Richard Burr (R., N.C.) sits on two committees that
received detailed briefings on the epidemic. On Feb. 13, he and his
wife sold as much as $1.7 million in stock. Sen. Kelly Loeffler
(R., Ga.) also sold shares.
Ms. Loeffler said she was unaware of the trades and that they
were handled by advisers. Mr. Burr said he relied on public news
reports in making his trading decisions.
Ms. Loeffler's husband, Jeffrey Sprecher, chief executive of
Intercontinental Exchange Inc., owner of the New York Stock
Exchange, sold $18 million in shares of the company he heads during
the period, including $15 million in March. That compares with a
monthly average of $2 million stock in 2019, according to the
analysis.
If he had held the stock, it would have declined by about $3
million in value, according to the Journal analysis.
Intercontinental Exchange said in a statement that Mr. Sprecher's
sales were part of a prescheduled trading plan.
As the stock market fell, Marsh & McLennan Cos. CEO Daniel
Glaser sold $26.5 million in stock, shaving $6.7 million in
potential losses. Securities and Exchange Commission filings show
the sales came under a preset plan and that he sold in March in the
two previous years as well.
Bond-rating company Moody's Corp. CEO Raymond McDaniel sold
shares totaling $10 million, compared with his monthly average of
$3.3 million in 2019. He spared himself about $2.7 million in paper
losses through the trades, the Journal analysis shows.
A spokesperson for Moody's said Mr. McDaniel's sales were
"carried out through an automated exercise of stock options
pursuant to a Rule 10b5-1 trading plan put in place in November of
last year." The plan has not been altered since that time, the
spokesperson said.
Write to Susan Pulliam at susan.pulliam@wsj.com, Coulter Jones
at Coulter.Jones@wsj.com and Andrea Fuller at
andrea.fuller@wsj.com
(END) Dow Jones Newswires
March 24, 2020 05:44 ET (09:44 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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