Why did this ASX 200 CEO just sell $1 million worth of his company's shares?

Is it normal for a CEO to sell $1 million of their own company?

Sebastian Bowen

Author Bio Sebastian Bowen has been a Motley Fool contributor since late 2018. Sebastian found his passion for writing and educating others about shares and all things finance after completing his studies in political, economic and social science and enjoys bringing this passion to life at the Fool. His investment philosophy is a simple one – buying high-quality companies at prices that make sense. When he’s not researching his next investment at all hours of the morning, Sebastian enjoys classic movies and likes to unwind with a good book, newspaper or record. Areas of Expertise Dividend investing ETFs Education Bachelor of Political, Economic, and Social Sciences (Government and International Relations), University of Sydney Social Media X/Twitter Favorite Investment Quote "In the short run, the market is a voting machine, but in the long run, it is a weighing machine." – Benjamin Graham

Published March 1, 2023 3:59 pm AEDT

When we hear that a director, let alone the CEO, of an ASX 200 share that we own is selling shares, it can cause some consternation. But $1 million worth of shares? Now we have something worth talking about.

That's exactly the situation faced by investors in Super Retail Group Ltd (ASX: SUL) today.

This morning, Super Retail Group, the company behind famous retail names like Rebel, BCF and Super Cheap Auto, put out an ASX announcement detailing this director transaction.

It reveals that Super Retail CEO and group managing director Anthony Heraghty offloaded a total of 87,000 shares of Super Retail Group last month. The transactions occurred over 22, 23 and 24 February, and amounted to a value of just over $1.17 million.

That implies an average sale share price of roughly $13.46 per share. That's fairly close to Super Retail's new 52-week high of $13.75 that we saw the company hit late last month.

Today, Super Retail shares are going for a bit below that level, asking $12.98 each at the time of writing.

Heraghty has been the CEO of Super Retail since early 2019. So why is the CEO of this company selling shares? Does this mean investors should follow suit and bailout?

A woman is excited as she reads the latest rumour on her phone. — Image source: Getty Images

ASX 200 CEO sells shares, should investors be worried?

Well, not really. CEOs buy and sell shares of their companies all of the time. We investors obviously like to see management have the same skin in the game as we do.

But even CEOs need to think about wealth diversification. It's rarely good investing practice to tie up 100% of one's wealth in a single share, even for an ASX 200 CEO.

In a statement put out concurrently with the ASX notice, Super Retail clarified that Heraghty's share sales have "been undertaken to fund a tax payment relating to the exercise of vested performance rights".

It also stressed that "Mr Heraghty continues to hold 252,840 ordinary shares and 340,986 performance rights in the Company".

Those ordinary shares alone would have a value of just over $3.28 million today. So it's not as though the CEO doesn't still have a lot of skin in the game here.

So it's up to investors to decide whether this sale of Super Retail Group's shares by its CEO is worthy of concern or not. But from the outside, this doesn't look like anything too out of the ordinary for a director.

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