Insider Trading at Safeway Raises Eyebrows

Commentary by George Anderson

The word coming from the nation’s capital and executive offices across the country is the economy is on the rebound, even if the unemployment rate remains high.

On Wall Street, equity investors are coming back to the market driving share prices up and turning some bears into bulls.

In retailing circles, the prospect of strong winter holiday sales on top of a better than expected back-to-school season has many industry watchers more upbeat than they have been in years.

So with so many positives, why do company insiders continue to sell off shares?

Thomson Financial issued reports over the summer showing insiders selling off 20 or more shares for every one purchased.

Last month, for example, Steve Burd, chairman, president and chief executive of Safeway exercised options to sell off 200,000 shares of company stock in four separate transactions.

Mr. Burd’s purchased the stock for $6.5625 and sold shares at $23.0376 and $25.714. Mr. Burd’s gross proceeds for the transactions came to $4,873,145.

Insiders selling stock for a profit is the point of purchasing shares in the first place, so there should be no rush to judge Steve Burd or any other corporate executive who sells their shares.

It is troubling to us, however, to see executives of struggling companies (some of which have cut jobs) making millions in stock transactions while ordinary shareholders wait for a return on investment.

Safeway shares closed up three cents yesterday to finish at $23.11. It finished 2002 at $23.21 a share.

Moderator’s Comment: Are corporate executives undermining their own efforts to move companies forward by selling shares during periods when other shareholders
are not experiencing adequate returns? [George
Anderson – Moderator]