Investors love it when a director of an ASX company buys up shares in their own company. It can show skin in the game, integrity, confidence in a company's future, and that 'money-where-the-mouth-is' factor too.
But equally, investors don't normally like to see their directors selling out shares of the company they are running.
This is true for all of those same, but inverted, reasons. If you caught, for example, the CEO of Coca-Cola buying Pepsi shares, there would certainly be some questions to ask.
Thus, shareholders of Brambles Limited (ASX: BXB) might want to know that not one but two of their company's directors have recently been offloading Brambles shares on the open market.
Yesterday, the logistics solutions company released an ASX announcement. This declared that Nessa O'Sullivan and Graham Chipchase have both sold shares recently. Chipchase is Brambles' CEO, while O'Sullivan is the chief financial officer.
According to the ASX release, Chipchase disposed of 11,377 Brambles shares on 18 November. This was executed at a price between $11.37 and $11.43 per share. The CEO would have received close to $130,000 for this trade.
O'Sullivan disposed of 6,466 shares on that same day, executed at similar pricing points. These trades would have been worth around $74,000.
Image source: Getty Images
Brambles directors sell shares. What's the deal?
Before you lose all confidence in Brambles due to the senior management team selling these shares, there are a few things to consider. Firstly, both Chipchase and O'Sullivan still own significant interests in Brambles.
Chipchase still holds 478,486 shares indirectly, as well as conditional performance share rights over 1.07 million shares.
O'Sullivan owns 9,000 shares directly, and another 262,362 shares indirectly. She has conditional performance rights over another 600,075 shares and conditional matched share prices over another 903 shares.
So it's not like these two directors don't still have significant skin in the game.
Additionally, we must also consider the nature of these sales. In the ASX release, Brambles declared that the reason for Chipchase's sale was this :
Automatic sale under the Brambles Limited Performance Share Plan (PSP) of 11,377 ordinary shares held by Certane SPV Management Pty Ltd on behalf of Mr Chipchase to cover additional employer withholding tax liability arising upon the exercise on 19 October 2022 of 219,564 vested Conditional Performance Share Rights granted under the PSP.
There was an almost identical declaration for O'Sullivan. So this is not Chipchase or O'Sullivan taking their shares and running. This was an automated process designed to cover tax costs for both parties.
That sounds a lot less ominous than what an investor might first fear when they hear that management is selling out of Brambles shares.
