? for stock savvy or business execs

[CaliforniaDreamin]

If a CEO starts dumping a ton of stock (almost 600,000 shares in one month), does that mean anything signifigant? I'm thinking it can't because if he has knowledge that is not common to shareholders, that is insider trading, right?
The stock is doing very well. And the CEO has actually lost money each time he dumped it. And this has been about 6 or 7 transactions.
It's just odd to me. This is the CEO of my DH's store. I know no one can tell me anything concrete, but could this be a red flag? Would you be concerned if it was your CEO?

 

[LuvOrlando]

It would be insider trading, but then again, insider trading is very hard to prove. After all, a CEO is entitled to dump stock, and that behavior would be legitimately justified if it's been performing poorly. Also, he/she could just be short on funds. Another alternative could be the stock could be on a rolling availability basis where he/she only gets access to it at a particular date off in the future and if that date just passed he/she might simply be exercising their right to liquefy.

Hmm, what does your gut tell you? If your company has been laying off people ect then it might be a sign of worse to come. Obviously, if he/she's selling he/she doesn't expect it to jump so that all by itself might be good enough for me, insider trading or not.

 

[CaliforniaDreamin]

It would be insider trading, but then again, insider trading is very hard to prove. After all, a CEO is entitled to dump stock, and that behavior would be legitimately justified if it's been performing poorly. Also, he/she could just be short on funds. Another alternative could be the stock could be on a rolling availability basis where he/she only gets access to it at a particular date off in the future and if that date just passed he/she might simply be exercising their right to liquefy.

Hmm, what does your gut tell you? If your company has been laying off people ect then it might be a sign of worse to come. Obviously, if he/she's selling he/she doesn't expect it to jump so that all by itself might be good enough for me, insider trading or not.

Not heard of layoffs. Yet. The stock has been performing great. I didn't think about the possibility of only being able to sell during a window. The website I found it on also listed some Exec VPs who sold as well, but no where near 600'000.

This is why I am nervous. My DH was a manager at Kmart. Then everyone starts hearing rumors that they would be closing most of their stores. The CEO had a conference call with all the managers and told them it was not true. And if you were thinking about buying a new house, go buy it. Want a new car, go buy it....nothing to worry about.
About a week later, press release was issued announcing the stores who would be involved in the FIRST round of closure. So it wasn't like the company shut down stores in markets that were not financially working for the company. They knew they would be shutting the majority of them. Even then, everyone was asssured that their store would not close, everything was fine...the company was just streamlining. Don't worry.
My DH's store was in the 3rd round of closings, I believe.
I really kick myself because in place of a severance, DH could have received that amount in stock. It was worth about 70 cents a share. We thought it would be completely useless, so he took the money. Well, a few months later, Sears absorbed Kmart and the stock for Sears Holding ended up around $143 a share after the announcement was made they had aquired Kmart. If we had kept the stock and been patient, we would have made over 800,000!!!! But we had no way of knowing.

 

[LuvOrlando]

Don't expect the company, any company, to do anything in your best interests. The easiest way I can explain it is to tell you what a Business Professor once told me. When a company trades publicly the execs work for the stockholders, and everything they do is in the stockholder's best interests. This basic premise is lost on a vast majority of people but I never let it leave my mind. Sure, a company may try to appeal to societies expectation that they are warm and fuzzy, family friendly even, but it's just a marketing ploy used in order to garner brand loyalty. There is no such thing as loyalty to employees. If lying to employees is necessary to meet corporate objectives then the execs are bound to lie. If a CEO has to hold a town hall meeting to say all is well in order to meet objectives then a meeting will be held and minds will be soothed. What happened to your DH is awful, but not even the slightest bit unusual. I wish I knew how these people who make these decisions live with themselves.

Don't let anyone tell you your eyes are lying to you, trust yourself. If you think something is up consider why you are thinking that way and act on it. Your CEO's behavior would be a flag for me too, but I think there are other clues. Like I said, it could be that he just gained access to the stock. A bigger question is what did he spend it on? Now that bonuses are out did the execs all go out and buy new cars? That would be a good sign. Do you know anyone around them who could say whether or not they are going on vacation this year? If not are you close enough to ask one as a matter of conversation? People's personal spending behavior is much more telling than their words. Take a close look, is your company doing severe things to cutback on spending? Where there is smoke there is fire, keep your eyes open and good luck.

 

[preb]

I really kick myself because in place of a severance, DH could have received that amount in stock. It was worth about 70 cents a share. We thought it would be completely useless, so he took the money. Well, a few months later, Sears absorbed Kmart and the stock for Sears Holding ended up around $143 a share after the announcement was made they had aquired Kmart. If we had kept the stock and been patient, we would have made over 800,000!!!! But we had no way of knowing.

Don't kick yourself at all. The Kmart stock did not roll over into Sears stock. The Kmart stock became worthless toilet paper. You would have lost everything.

 

[CaliforniaDreamin]

Don't expect the company, any company, to do anything in your best interests. The easiest way I can explain it is to tell you what a Business Professor once told me. When a company trades publicly the execs work for the stockholders, and everything they do is in the stockholder's best interests. This basic premise is lost on a vast majority of people but I never let it leave my mind. Sure, a company may try to appeal to societies expectation that they are warm and fuzzy, family friendly even, but it's just a marketing ploy used in order to garner brand loyalty. There is no such thing as loyalty to employees. If lying to employees is necessary to meet corporate objectives then the execs are bound to lie. If a CEO has to hold a town hall meeting to say all is well in order to meet objectives then a meeting will be held and minds will be soothed. What happened to your DH is awful, but not even the slightest bit unusual. I wish I knew how these people who make these decisions live with themselves.

Don't let anyone tell you your eyes are lying to you, trust yourself. If you think something is up consider why you are thinking that way and act on it. Your CEO's behavior would be a flag for me too, but I think there are other clues. Like I said, it could be that he just gained access to the stock. A bigger question is what did he spend it on? Now that bonuses are out did the execs all go out and buy new cars? That would be a good sign. Do you know anyone around them who could say whether or not they are going on vacation this year? If not are you close enough to ask one as a matter of conversation? People's personal spending behavior is much more telling than their words. Take a close look, is your company doing severe things to cutback on spending? Where there is smoke there is fire, keep your eyes open and good luck.

This may be a sign, let me run it by you and see what you think. My DH has been in grocery or retail management since he was 22...so thats 15 years. He has AlWAYS been salaried. Just today, there was a meeting of all the managers in the distict down in Charlotte. His position will go from salary to hourly and he will be required to work a 45 hour work week. Sounds pretty good, huh? Overtime would be great. But hold up. Yes, they are going to calculate time and a half for the managers OT for the 5 hours per week, but the hourly rate is going to be reduced by that amount so it won't change a dime on anyone's check. So basically, what he makes per hour will decrease, and the 5 hours of OT will bring him up to what he was making before. Does that make sense? It's so stupid, it's kinda hard to wrap your head around it. And my DH was so frustrated with the other managers down there who actually believe they will make more money.They were thrilled! He tried to explain it to them. The VP even handed out a sheet with the formula on it. But these managers couldn't comprehend what the company is doing. Basically, you will receive the same gross pay as before, but you are going to work 45 hours instead of 40. Wait til those people get their next checks...maybe then they will understand how underhanded this is. That is so rotten, it makes me sick. Basically, this company will be getting 20 hours of extra work from management every month and not have to compensate them for it. And this company gave out around $5 million in exec bonuses in 2008. It more than tripled to $17 million for 2009.

 

[CaliforniaDreamin]

Don't kick yourself at all. The Kmart stock did not roll over into Sears stock. The Kmart stock became worthless toilet paper. You would have lost everything.

Whew, all these years I have been kicking myself. It's nice to know we didn't make a mistake that cost us almost a million dollars.

 

[jsmith]

While it seems odd-its actually not-and may work to some store managers advantage-i have NEVER EVER EVER know anyone who was a salaried retail manger who worked 40 hours a week-ever-and even salaried in IT i work roughly 50 hours a week sometimes as much as 70-with the shift to hourly with 45 hour work weeks-and no increase in pay-your husbands team is assured of working 45 hours a week-if they work 46-or 70-they will be compensated accordingly. This actually seems much more fair to me than the previous pay structure-and since it is in fact a more expensive way of paying employees-not really a sign of collapse-had they suddenly moved hourly employess to salary and required extra hours-that would raise a red flag.