Dollar General CEO sells shares, investors worry
One of the typical perks of being a top executive at a publicly traded company is that shares of the company stock are part of the deal. In fact, it’s the wealth inherent in the stock that allows a few top CEOs to take very little in the way of salary from the companies they run. On the downside, as a recent article on The Motley Fool website points out, investors can find it "nerve-racking" when a top executive sells shares in companies in which they are invested. One recent example involved Rick Dreiling, CEO of Dollar General.
Mr. Dreiling recently sold the majority of his shares in the chain for a sum of nearly $19 million. While the article pointed out that Dollar General has achieved same-store sales increases over the past six years, it also listed a variety of factors that could mean more difficult going for the chain in the future. In the end, the article failed to draw any conclusion as to what Mr. Dreiling’s sale would mean for the company.
Controversies, real or imagined, over CEOs selling shares are certainly nothing new. Back in 2003, Steve Burd, the former chairman, president and chief executive officer of Safeway, exercised options to sell around 200,000 shares of the company’s stock he held. Mr. Burd made a tidy profit on the deal, which was both financially smart and his right, but he received criticism for achieving this windfall when the company was struggling, labor problems were a recurring theme and shareholders were grumbling over their returns from Safeway stock.
- Dollar General’s CEO Is Selling. Should You? – The Motley Fool
- Insider Trading at Safeway Raises Eyebrows – RetailWire
What is your view on the use of shares as executive compensation? What kind of signal does it send to investors and stakeholders when a CEO of a retail company has sold a large block of stock?