Oakley Chairman to Buy as Many as 1 Million Shares

Oakley Inc. Chairman Jim Jannard, who has watched his company’s stock plummet this year, said Monday he would buy up to 1 million Oakley shares in the open market, boosting his stake to just over 50%.

Jannard said his decision to buy shares of the maker of upscale sunglasses was “based on the fundamental strengths of the company and our long-term growth prospects. . . . I believe Oakley’s stock is substantially undervalued.”

Oakley’s stock has tumbled from a high of $27.125 to $10.625. On Monday, the stock was unchanged, closing at $11 per share in trading on the New York Stock Exchange.

While it’s unusual for a corporate executive to buy so many shares, publicly traded companies regularly buy back their own shares when stock prices fall below levels that corporate executives consider appropriate. The purchases are designed to bolster shareholder confidence and to help increase the value of outstanding shares.

Stock buyback plans also increase toward the end of the year, market observers say, as companies with depressed stock prices try to position themselves against year-end selling by investors looking for tax benefits associated with unloading stocks that have lost considerable value.

The slump in Oakley’s stock has been driven in large part by sluggish sales at Sunglass Hut, a Coral Gables, Fla.-based retail chain that generates more than a third of Oakley’s overall sales. Oakley and Sunglass Hut maintain that the sales slowdown will not stretch into 1997.