"Tesco exec sold shares ahead of profit warning"

"Tesco exec sold shares ahead of profit warning"

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gingerpaul

Original Poster:

2,929 posts

245 months

Saturday 14th January 2012
quotequote all
I thought this story might be quite interesting to people on here.

http://www.reuters.com/article/2012/01/13/tesco-id...

A senior Tesco executive sold stock just over a week before a profit warning sent its shares plunging, a regulatory filing shows, causing fresh embarrassment for the world's third-biggest retailer.

Noel "Bob" Robbins, UK chief operating officer, sold 50,000 shares at 404.51 pence apiece on Jan. 4, netting around 202,000 pounds ($309,000), according to a filing published on Jan. 5.

"It doesn't look very good, especially in this case, when you are head of UK operations," said Simon Wong, a partner at corporate governance watchdog Governance4Owners.

Tesco said it and Robbins had operated within the rules.

Swiss National Bank's chairman resigned last week over his wife's currency dealings as he said his position was untenable? As the UK chief operating officer is the same now true for Bob Robbins?

Marf

22,907 posts

243 months

Saturday 14th January 2012
quotequote all
If he sold his shares outside a blackout period, fair game.

0a

23,907 posts

196 months

Saturday 14th January 2012
quotequote all
It was only 5% of their holdings, 8 days before the announcement and the two directors are £40k and £28k better off. I doubt anything will be proven, Tesco states the sales took place outside of the close period.

havoc

30,325 posts

237 months

Saturday 14th January 2012
quotequote all
Marf said:
If he sold his shares outside a blackout period, fair game.
Is it? It's still akin to insider dealing - he was (most probably) party to information which the general market wasn't.

Mattt

16,661 posts

220 months

Saturday 14th January 2012
quotequote all
havoc said:
Is it? It's still akin to insider dealing - he was (most probably) party to information which the general market wasn't.
Poor retail figures? Fairly common knowledge I thought.

Gene Vincent

4,002 posts

160 months

Saturday 14th January 2012
quotequote all
Maybe he realised that Anthony Worrall-Thompson was going shopping soon!

Marf

22,907 posts

243 months

Saturday 14th January 2012
quotequote all
havoc said:
Marf said:
If he sold his shares outside a blackout period, fair game.
Is it? It's still akin to insider dealing - he was (most probably) party to information which the general market wasn't.
Well, that very much depends on whether or not he knew doesn't it? If his employer says he acted within the rules, then what's the problem?

I guess people will get their nose bent out of shape because he earned £200k from the sale, I mean its rather the fashion to be critical of people making money these days, isnt it?

Tallow

1,624 posts

163 months

Saturday 14th January 2012
quotequote all
Marf said:
Well, that very much depends on whether or not he knew doesn't it? If his employer says he acted within the rules, then what's the problem?

I guess people will get their nose bent out of shape because he earned £200k from the sale, I mean its rather the fashion to be critical of people making money these days, isnt it?
I'd agree with this: If he's broken the law, they should prosecure him. If he hasn't, it's a non-issue. As you rightly say, being an executive and earning good money is becoming a social faux pas these days. If he's earned the money (and the stock options) fair and square, good luck to him.

James P

2,963 posts

239 months

Saturday 14th January 2012
quotequote all
havoc said:
Marf said:
If he sold his shares outside a blackout period, fair game.
Is it? It's still akin to insider dealing - he was (most probably) party to information which the general market wasn't.
Taking this to the extreme, he would never be able to sell any shares until he left the job.

havoc

30,325 posts

237 months

Saturday 14th January 2012
quotequote all
Marf said:
havoc said:
Marf said:
If he sold his shares outside a blackout period, fair game.
Is it? It's still akin to insider dealing - he was (most probably) party to information which the general market wasn't.
Well, that very much depends on whether or not he knew doesn't it? If his employer says he acted within the rules, then what's the problem?

I guess people will get their nose bent out of shape because he earned £200k from the sale, I mean its rather the fashion to be critical of people making money these days, isnt it?
He WILL have known about performance before the market, the question is all one of timing.

It looks like Tesco's year-end is a week into January, for some odd reason (ensuring accuracy of Xmas results?), so he won't have seen any final results. But most blue-chips have 'pre-reporting' (often just sales and operating profit final-forecasts - not precise but to within a fraction of a % of final outcome, usually) built into year-ends and half-years, so the Board can get an early indication of results and plan how they're going to present that to the markets. COO is often on the distribution lists for them, but even if not it'd be very easy for him to become aware, as Directors DO talk to each other...

...so my gut-call on this is that he probably saw the pre-reporting, saw the gap vs budget/forecast, and made a snap decision to sell. That this is outside of the closed period for Tesco's is a case of letter vs spirit - it's WELL within the tied period for some of their competitors!

Marf

22,907 posts

243 months

Saturday 14th January 2012
quotequote all
Well if that is the case, then the problem is with the corporate policy, and I'd find it incredibly strange that there wouldn't be extended blackout periods for senior staff who may be privvy to pre-reporting financials.

GeraldSmith

6,887 posts

219 months

Saturday 14th January 2012
quotequote all
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

davepoth

29,395 posts

201 months

Saturday 14th January 2012
quotequote all
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.

Marf

22,907 posts

243 months

Saturday 14th January 2012
quotequote all
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.
Two weeks I think it was at my previous company, NYSE listed.

Edited by Marf on Saturday 14th January 18:31

Changedmyname

12,545 posts

183 months

Saturday 14th January 2012
quotequote all
Gene Vincent said:
Maybe he realised that Anthony Worrall-Thompson was going shopping soon!
Have a hehe

Hackney

6,874 posts

210 months

Saturday 14th January 2012
quotequote all
havoc said:
He WILL have known about performance before the market, the question is all one of timing.

It looks like Tesco's year-end is a week into January, for some odd reason (ensuring accuracy of Xmas results?), so he won't have seen any final results. But most blue-chips have 'pre-reporting' (often just sales and operating profit final-forecasts - not precise but to within a fraction of a % of final outcome, usually) built into year-ends and half-years, so the Board can get an early indication of results and plan how they're going to present that to the markets. COO is often on the distribution lists for them, but even if not it'd be very easy for him to become aware, as Directors DO talk to each other...

...so my gut-call on this is that he probably saw the pre-reporting, saw the gap vs budget/forecast, and made a snap decision to sell. That this is outside of the closed period for Tesco's is a case of letter vs spirit - it's WELL within the tied period for some of their competitors!
Tesco year end is end of Feb. These were just Christmas results, hence the timing and short (3 day) embargo on sale (30 days prior to quarterly figures, 60 days for annual)

davepoth

29,395 posts

201 months

Saturday 14th January 2012
quotequote all
Regardless of the rules, it looks dodgy to me. You don't want that from executives.

Hackney

6,874 posts

210 months

Saturday 14th January 2012
quotequote all
0a said:
It was only 5% of their holdings, 8 days before the announcement and the two directors are £40k and £28k better off. I doubt anything will be proven, Tesco states the sales took place outside of the close period.
He's actually £202,250 better off having sold 50,000 shares at 404.5p
This is £47,450 more than if he'd sold them after the drop.

The problem is, what ever Tesco's PR department may say about how they champion the consumer and make savings for the shopper this action - even though it's not illegal - shows remarkable lack of common sense. Or is it that people in this position just don't care?

Being in a position to make a six figure sum, he chose to make £200k versus £150.
And why even make the sale, this is 5% of his total shareholding. So he currently sits on 950,000 shares which are worth, post "the big price drop" a staggering £3m.
So, a man with (on paper at least) over £3.2m in shares decided to make a paltry sum because he could. And if he didn't have some inside knowledge - which I find laughable - why not sell before Christmas?




Edited by Hackney on Saturday 14th January 18:51

HundredthIdiot

4,414 posts

286 months

Saturday 14th January 2012
quotequote all
Marf said:
Well if that is the case, then the problem is with the corporate policy, and I'd find it incredibly strange that there wouldn't be extended blackout periods for senior staff who may be privvy to pre-reporting financials.
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.

Mattt

16,661 posts

220 months

Saturday 14th January 2012
quotequote all
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'?