Chairman Sold Shares Before Northwest Filing
Northwest Airlines Corp. Chairman Gary Wilson sold $1.8 million worth of the company’s shares four weeks before the No. 4 U.S. airline filed for bankruptcy protection, according to regulatory filings.
Wilson, who has been Eagan, Minn.-based Northwest’s chairman since 1991, sold 341,760 shares through 147 transactions from Aug. 18 to Aug. 26, bringing his holdings to 563,180 shares, according to filings Monday with the Securities and Exchange Commission. Northwest and Delta Air Lines Inc. sought Chapter 11 bankruptcy protection Sept. 14 as losses mounted amid soaring fuel prices and competition from low-fare airlines.
Northwest spokesman Kurt Ebenhoch said the sales were made under an SEC rule and declined to comment further. The rule allows company insiders to trade shares when it’s clear that material information wasn’t a factor in the decision to trade.
“It’s reprehensible,” said Nell Minow, editor of the Corporate Library, an independent research firm in Portland, Maine, that rates corporate boards. “The captain is expected to go down with the sinking ship.”
Wilson, who owned about 1.4 million shares June 16, sold an additional $2.1 million in shares from mid-June to Aug. 17, according to previous filings.
He sold the most recent batch of stock in a range from $5.07 to $5.84 a share, according to the filings.
Northwest shares fell 3 cents to 81 cents Tuesday.
Good corporate governance is based on watching over investors’ money, said Minow, whose firm rates Northwest’s board as a “D.”
“Shareholder interests come first,” she said. “When you engage in a transaction that is an advantage to you over other shareholders, that is a violation of that duty of loyalty.”
Northwest said repeatedly this year that it needed $1.1 billion in annual labor cost reductions and the postponement of pension contributions to return to profitability. Northwest’s mechanics went on strike Aug. 20 because the company wanted to cut jobs to win $176 million in concessions from their union.
Separately, airport authorities in California, Colorado, Florida and Indiana asked a U.S. court to allow Northwest to continue paying monthly passenger fees as it seeks to reorganize.
