Trthman30 has just alerted me to interesting news about your friend and mine, JP Garnier the CEO of Glaxo. It seems his share options have been exercised and sold on straight away.
His actions are being discussed on investment sites around the world such as this one.
“I see from the news tab that Garnier has just exercised a goodly chunk of options and sold every last one of them, netting himself just under £6,000,000 in the process.
That doesn’t send a very encouraging signal to shareholders who would like to see these bigshots’ legs held firmly to the fire.
Makes you wonder what Garnier thinks about GSK?
Well, for sure, one thing he thinks is that, given an influx of almost 6 million ackers he’s got something better to do with the wonga than keep it in GSK shares!
I’m all for diversification, but it would have sent a better signal if he’d only trousered, say £5 million in cash and had held on to a tiny amount, say £700,000 worth of shares.
I do like to see these fat cats justify their stonking benefits by regularly jacking up their shareholdings, even if only slightly, rather than dumping the lot when option crystallising time arrives”.
Of course I’m sure his actions have nothing to do with the current Avandia crisis or the looming Seroxat litigation in the UK.
However, Avandia and Seroxat are not the only problems on JP’s desk. The company is also struggling in the face of a weak dollar, which has eroded the value of its sales across the US, the world’s largest pharmaceuticals market. Overall, the company is expected to report lower revenues and little change in earnings per share compared with last year.
Frustrated by the sluggish performance of its shares, Glaxo has already faced pressure from investors to consider a sale of its consumer healthcare unit, which includes the drinks brands Ribena and Lucozade, Aquafresh toothpaste and Nicorette antismoking patches.
In fact, the only way Glaxo could keep its share price up against all the bad news was to more than double its share buyback programme to £12 billion .
This boosted its shares even as sliding sales of diabetes drug Avandia held back second-quarter profit.
Garnier told reporters that the buyback would not affect Glaxo’s flexibility to do deals and the group had scope to borrow large amounts of money for the right acquisition…
“I’ll be a hero in three years” Jean-Pierre Garnier 5 April 2004