IBM Executives' Insider Trading

January 6, 2002 - from www.ibmemployee.com

Very interesting news as of late is the the exercise of options and sales of IBM stock by corporate executives, including CEO Lou Gerstner. The high level of compensation received by corporate officers such as Mr. Gerstner is especially startling given the high number of layoffs in corporate America, including IBM.

The Yahoo! insider trading page for IBM shows insider and restricted shareholder transactions reported over the last year, including transactions through November, 2001. The following table shows the top ten IBM insiders as of December 22, 2001, according the the online edition of the Wall Street Journal. Current data is available at the WSJ online.

From the Yahoo! insider trading information and this chart, some interesting observations can be made:

On October 21, 2001, Nicholas Donofrio exercised options on 65,684 shares of IBM stock for which he paid $11.58 per share for $111.24 per share, netting $6,546,068.

On November 7, 2001, John Thompson exercised options on 124,210 shares of IBM stock acquired for $34.32 per share and sold for $114.47 per share, netting $9,954,477.

The next day, November 8, 2001, Mr. Thompson exercised options on an additional 125,002 shares acquired for $36.06 per share and sold for $114.80, netting an additional $9,842,657, or nearly twenty milliion dollars in two days.

On November 9, 2001, Douglas Elix exercised options on 100,800 shares of IBM stock acquired for $33.97 per share and sold for $113.10 per share, netting $7,976,050.

On November 16, 2001, CEO Louis Gerstner exercised options on 160,000 shares acquired at $29.25 per share and sold for $115.00 per share, netting $13,720,000.

Three days later, on November 19, 2001, Mr. Gerstner exercised options on an additional 167,000 shares, acquired at $31.67 per share and sold for $115.00 per share, netting an additional $13,916,110.

Four days later, on November 20, 2001, Mr. Gerstner exercised options on an additional 173,000 shares, acquired at $31.67 per share and sold for $115.01 per share, netting an additional $14,417,820. In the five days extending from November 16 to November 20, 2001, Mr. Gerstner netted over $40 million in stock option sales.

In May, Mr. Gerstner exercised stock options netting him nearly $75 million. For the year, and not including any transaction Mr. Gerstner may have made in December, Mr. Gerstner's compensation from stock options was well above $100 Million for the year.

Joseph C. Lane, an Officer and a Senior Vice President reported initial holdings of 6,639,421 shares of IBM stock on September 24, 2001 - This was later found to be a typographical error.