Outgoing Truworths CEO cashes in R115m
bdlive.co.za - Sep 1st 2014, 10:33
Within a week of announcing his retirement from the group he led for two decades, Michael Mark, Truworths CEO, cashed in 1.6-million shares, clocking up a R115.5m pretax profit.
The share trades, described as part of a "rebalancing of Mr Mark’s investment portfolio", will reduce his holding in the retailer to 5.1-million shares and options.
This portfolio rebalancing exercise scored him R202.7m in the past year. In March, Mr Mark sold 700,000 shares in four transactions that generated R48.6m. In addition, in September last year, Mr Mark disposed of an additional 500,000 and generated a pretax profit of R38.6m.
Despite this, Mr Mark still has a hefty chunk invested in Truworths. At R74 a share, his remaining holding is valued at about R377m.
Nevertheless, given the outlook for the retail sector in general and credit-based retailers in particular, it is unlikely he will achieve the current share price level for any additional sales in the next year or so.
Analysts are jittery about the fact that 70% of Truworths sales are on credit, given the fallout from unsecured lending that recently hit African Bank. Some also contend that Truworths is vulnerable to the growing number of global retailers making inroads in South Africa.
The details of the share sale, announced late on Wednesday, highlight the extent of the strong performance achieved by Truworths under his leadership.
The shares sold were options granted to him in November 2000 under the company’s share incentive scheme at R3.66 each. Mr Mark converted 1.6-million of these options into shares and immediately sold them for R74 each.
He could have made considerably more money had he done the "rebalancing" act a year earlier when Truworths was trading above R100.
He did sell blocks of shares last August and September, again in a portfolio balancing exercise, but the top price he got was R84 a share.
Ironically, the ongoing share-repurchasing programme implemented by Truworths has seen the company buy back shares at levels higher than Mr Mark was able to get for his shares.
A spokesperson for Truworths said executives are not allowed to sell shares at the same time as the company is buying back stock.
In last week’s results presentation, Truworths said it repurchased 6.2-million shares at an average price of R78.94 during its 2014 financial year.
In its previous financial year, Truworths paid an even steeper price to repurchase shares. In March 2013, the company spent R316m buying back shares at R90 a share.From DFM Publishers (Pty) Ltd
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