Heavy Executive Stock Sales At Boeing

Boeing (NYSE:BA) announced that they have 514 orders for the 787 Dreamliner, the next generation passenger aircraft. Airbus is in a shambles and will not present a credible threat for quite some time. Nothing but blue sky and smooth flying -- one would think.

The stock has rewarded investors very well. In early 03 you could have acquired shares in the mid $20's. Now the stock trades around the $90 level. That's quite the run and some investors could not be blamed for wondering about the future and what is truly left.

Institutions have been lightening their loads with a mild net distribution effect. At the $90 level, institutional interest would trump retail activity. But check out senior insider trading. There has been a very distinct sales process as options are exercised and the famous non open market sale kicks in. The senior guys do not need the cash. But it seems that almost every transaction is a disposition.

James McNerney Jr., Laurette Koellner and James Albaugh have all consistently and exclusively exercised and disposed of very large blocks of stock since the new year. This trio are the three top executives of course and their insights have to be the best there is. If they and other executives are personally arriving at the financial departure lounge with this magnitude of disposition then you should assume guidance has been given.

Comments

[todd.h.blecher:]

The information in this entry is incorrect. Boeing executives Jim McNerney, Jim Albaugh and Laurette Koellner haven't "consistently and exclusively exercised and disposed of very large blocks of stock since the new year." Neither is it correct to conclude that "If they and other executives are personally arriving at the financial departure lounge with this magnitude of disposition then you should assume guidance has been given."

CEO Jim McNerney has made no dispositions this year other than a Jan. 3 transaction in which 9,825 shares were disposed of for tax obligations on a grant of vested shares. Jim Albaugh sold 10,000 shares on Feb. 20, 2007 while Laurette Koellner disposed of roughly 24,000 shares, also in February. Those totals represent small fractions of their overall holdings.

What's more, Mr. McNerney is required to hold Boeing stock equal to six times his base salary, while Albaugh and Koellner are required to hold four times their base salary. All meet those requirements.

As of this week, 14 of the 25 Wall Street analysts following Boeing have buy-equivalent ratings on the stock. The consensus 12-month price target from the 25 analysts is $102 a share.


Todd Blecher
The Boeing Company
Corporate Communications
Chicago, IL

2007 Apr 05 03:57 PM

[George Guto...:]

I believe that we may all conclude that the three executives in question are selling and not acquiring any additional shares other than that which they receive through their compensation arrangements. Its nice to see that their required holdings as a multiple of their base salary are in adherance with internal employment requirements. It is also true that they are chosing to reduce their holdings when they are not beholden to their contracts. This is always a signal which needs to be viewed, noted, parsed and analyzed. I note your comment that Mr. McNerney needed to settle a tax obligation. Of all the options he may have availed himself of he sold Boeing shares. This is telling. My comments in the original post and this reply are in the context that Boeing has had a great run and that there is a natural inclination to ponder if the run will continue. Senior officers, who supposedly do not leave money on the table, are disposing of Boeing shares.

2007 Apr 10 07:58 PM

[todd.h.blecher:]

I was remiss in my first reply in not pointing out that Boeing executives, including Mr. McNerney, don't have a choice in determining how to settle tax obligation associated with stock grants. The company policy is to deduct from a grant the number of shares necessary to settle the taxes.

Todd Blecher
The Boeing Co.
Corporate Communications
Chicago, IL

2007 Apr 13 05:45 PM