Ameritrade Limits Stock Sales for Execs, Board
Even if Ameritrade Holding Corp. insiders want to lock in their profits while they can, the company ain’t buying it.
Ameritrade, whose shares have lost two-thirds of their value since the spring, tightened restrictions Tuesday on when and how much stock its executives and board members can sell. Analysts called it a novel move.
Top executives and board members will be limited to selling no more than 5% of the shares they receive as part of their compensation each year. In addition, they must disclose their intention to sell by Dec. 31 of the previous year.
The rules sharpen a policy announced in March that required insiders to give notice of intended sales.
“These new guidelines strengthen the commitment our executives and board members have made to the shareholders,” said Chairman and co-Chief Executive J. Joe Ricketts.
Ricketts sold $3.9 million in shares to other managers in October. Directors who have recently sold shares include Joseph Konen, who sold shares worth $2.25 million in November.
Ameritrade shares (ticker symbol: AMTD) slumped an additional $2 to close at $20.50 on Nasdaq, but they remain up 290% in 1999. The Omaha company announced its new policy before trading opened.
Spokesman Michael Anderson declined to say why Ameritrade was putting a limit on share sales by executives.
“It’s the first time I’ve seen it,” said Bob Gabele, director of insider research at First Call/Thomson Financial. “There may be some selling caps behind the scenes, though.”
Companies often limit selling during specific time windows, Gabele said, such as the period surrounding an earnings news release. Executive guidelines also sometimes require ownership of at least a minimum number of shares, he said, but a cap on the number of shares that can be sold is “extremely rare, if not unheard of.”
Noting the company’s March announcement, he called its policies on insider trading “very proactive.”
Ameritrade shares, which have tumbled from a 52-week high of $62.81 on April 14, have been weighed down by a decline in the growth of online trading by individuals, stiffer competition and higher costs of attracting new customers.
The sixth-biggest brokerage needs money to pay for the expansion of its brokerage business. It plans to spend $200 million on advertising in the next year and has opened two new data centers to handle twice the number of customer trades since late 1998.
