"Tesco exec sold shares ahead of profit warning"

[davepoth]

Mattt said:

He's an Executive, as James says above - when can he sell shares with zero 'inside knowledge'?

Never. The thought is that perhaps he would have had a little more faith in his abilities as an executive though? This implicitly says "Tesco's fked and I want to buy a Porsche while I still can".

[havoc]

Mattt said:

HundredthIdiot said:

Corporate policy may be AN issue, but it isn't THE issue.

Isn't insider trading defined as trading based on material non-public knowledge? I would have thought that any non-public pre-reports counted as material.

He's an Executive, as James says above - when can he sell shares with zero 'inside knowledge'?

It's reasonably simple, IMHO - any time in the run-up to or immediately after a significant 'date' (year-end, half-year, Xmas trading results, announcement of a merger/acquisition, announcement of debt-restructuring etc.) should be embargoed. Tesco's HAVE done this, but with a significantly smaller window than most other retail blue-chips. The COO legally hasn't done anything wrong, however morally he's on very dodgy ground* and morally so are Tesco's for giving their exec's so much leeway.

That would cover, IMHO, no more than 10-15% of a typical year, and spread out - hardly an inconvenience to someone like that...


* And I say this as a corporate accountant.

[turbobloke]

Tesco isn't effed though.

If lawful, and other Tesco top dogs say OK, which they have already done apparenty, then ultimately not a matter for fierce condemnation. A few tut tuts should do it, particularly for Guardian readers to feel better about themselves and their own positions - then on to the toasted muffins, or recycled yoghurt for grauniadistas.

[Du1point8]

davepoth said:

Mattt said:

He's an Executive, as James says above - when can he sell shares with zero 'inside knowledge'?

Never. The thought is that perhaps he would have had a little more faith in his abilities as an executive though? This implicitly says "Tesco's fked and I want to buy a Porsche while I still can".

And if you read above he sold only 5% of his shares which is hardly a lot... maybe he needed the money and wanted to take it out...

But as an Ex he will know the Q1, the Q2, the Q3 and the Q4 results as they are often talked about in meetings all the time until they are released so by that information he should never sell the shares and never get the money???

[birdcage]

He'll be fine. It's kosher. He is not on the board and owns shares which he sold... Next...

[Ayahuasca]

The catalyst for the shares plunging was not poor results per se (common knowledge) but the board's profit warning (private knowledge until it was made).

If he knew about the imminent profit warning before he sold the shares then questions should be asked.

[eccles]

havoc said:

Mattt said:

HundredthIdiot said:

Corporate policy may be AN issue, but it isn't THE issue.

Isn't insider trading defined as trading based on material non-public knowledge? I would have thought that any non-public pre-reports counted as material.

He's an Executive, as James says above - when can he sell shares with zero 'inside knowledge'?

It's reasonably simple, IMHO - any time in the run-up to or immediately after a significant 'date' (year-end, half-year, Xmas trading results, announcement of a merger/acquisition, announcement of debt-restructuring etc.) should be embargoed. Tesco's HAVE done this, but with a significantly smaller window than most other retail blue-chips. The COO legally hasn't done anything wrong, however morally he's on very dodgy ground* and morally so are Tesco's for giving their exec's so much leeway.

That would cover, IMHO, no more than 10-15% of a typical year, and spread out - hardly an inconvenience to someone like that...


* And I say this as a corporate accountant.

The more I read about the way the city and those in the boardroom reward themselves the more I realise morals have very little to do with it!

[johnfm]

davepoth said:

This blackout period is less than two weeks as I understand it. The last time I worked for a listed company the blackout period was two months or more.

Regardless of a blackout period, I believe he traded the shares when he did because he knew the value was going to go down when the figures were released, and he was privy to that information before the market. The very definition of insider trading.

Thankfully, what you believe isn't the basis of legal action in this country.

The basis of your 'belief'? The blackout period of one of your employers.

Do you have any evidence that he acted on 'insider information', or are you just speculating?

PH- speculation matters.....

[havoc]

eccles said:

The more I read about the way the city and those in the boardroom reward themselves the more I realise morals have very little to do with it!

True. Utterly true.

(TB, your post too! )

[johnfm]

davepoth said:

Mattt said:

He's an Executive, as James says above - when can he sell shares with zero 'inside knowledge'?

Never. The thought is that perhaps he would have had a little more faith in his abilities as an executive though? This implicitly says "Tesco's fked and I want to buy a Porsche while I still can".

Part of his pay package (probably a large part of his bonus structure) will be in shares.

He has to sell the shares at some stage to get some cash value of this element of his remuneration.

By your logic, he can never sell any shares, because selling shares by a company exec is an indication of doomed share price activity.

Your logic is flawed, btw.

[Wills2]

I think it's difficult, but I would have said that common sense would have said wait for the bad news (that they knew was coming even if the specific detail wasn't known by the exec involved) and then sell the shares.

Surely they knew the negative reaction such a move would provoke.

[paulrussell]

He's in charge of the UK and Ireland side of the company, so I would of thought he would of known about the poor christmas sales.

[Disco_Dale]

GeraldSmith said:

Tesco did two things, they announced results that weren't great but the also reduced their forecasts and it is more the latter that will have hit the share price. It's quite possible he wasn't aware of that information

Tell us another!

[HundredthIdiot]

johnfm said:

Part of his pay package (probably a large part of his bonus structure) will be in shares.

He has to sell the shares at some stage to get some cash value of this element of his remuneration.

By your logic, he can never sell any shares, because selling shares by a company exec is an indication of doomed share price activity.

The simple solution is to announce senior exec share sales several months in advance. I vaguely recall this happening with execs of big US corps.

[dfen5]

HundredthIdiot said:

johnfm said:

Part of his pay package (probably a large part of his bonus structure) will be in shares.

He has to sell the shares at some stage to get some cash value of this element of his remuneration.

By your logic, he can never sell any shares, because selling shares by a company exec is an indication of doomed share price activity.

The simple solution is to announce senior exec share sales several months in advance. I vaguely recall this happening with execs of big US corps.

He will not have lowered forecasts and set his bonus target for the next year accordingly. He will not have thought about plans to cut costs, force suppliers to cut prices and get the public to spend more with Tesco. This way he won't hit his target and get a massive cash/share payout. He won't a pat on the back for a great achievement, getting things back to last years figures and offered a job on the MPC.

Of course, no pension scheme would have bought Tesco shares just before this news so no one gets hurt.

[Ozzie Osmond]

Mattt said:

He's an Executive, as James says above - when can he sell shares with zero 'inside knowledge'?

The normal approach is to sell shortly AFTER a results announcement in order to be in the clear and be seen to be in the clear. (Obviously he still can't sell if there is other significant price sensitive information of which he's aware.)

He will almost certainly jave received clearance from the Chairman before selling. Companies operate internal codes to keep everything straight. Breach of that code would almost certainly breach an executive's contract of employment.

[Derek Smith]

Ayahuasca said:

The catalyst for the shares plunging was not poor results per se (common knowledge) but the board's profit warning (private knowledge until it was made).

If he knew about the imminent profit warning before he sold the shares then questions should be asked.

This. Those waffling on about profits are not addressing the issue.

[gingerpaul]

Just a quick follow up to this thread for anyone that was interested last month.

"Tesco moves UK executive who sold shares"

http://uk.reuters.com/article/2012/02/01/tesco-idU...

"The announcement said Robbins, who has held the UK COO role since March 2011, will work directly for group chief executive Philip Clarke "on a number of initiatives".

"Bob will work directly for me in a new role that will allow the executive team to increase its focus on the strategic priorities we have established whilst strengthening further the support we provide to the UK business," said Clarke."

[HundredthIdiot]

Sounds like the "special projects" kiss of death to me.

[arfur sleep]

12-18 months and he'll be gone.

Happened at a place i worked at. Bit of a fracas in manufacturing, senior director got moved out of the manufacturing role into a troubleshooter role at CEO's call. Did a few jobs and was then set free to "explore opportunities outside the company" with a generous golden parachute and a confidentiality agreement so watertight that you could have sailed the Atlantic on it