Why has the NIB boss sold over $500,000 of company shares in the past week?

The private health insurer has issued an explanation as to why its CEO has sold 70,000 shares.

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It's bound to set off alarm bells for any ASX investor when a company director sells hundreds of thousands of dollars in shares of the company they run.

Even louder, still, when it's the company CEO and managing director doing the selling.

But there's often no cause for concern. And that appears to be the case in this latest example of company directors selling down some of their personal holdings post-earnings season.

In an ASX announcement today, we learned that NIB Holdings Limited (ASX: NHF) CEO Mark Fitzgibbon has offloaded 70,000 NIB shares.

Here's why.

Why has the NIB boss sold over $500,000 of shares?

Sometimes, companies issue statements to the ASX directly explaining a director's sale — especially when it's a pretty large one.

In this case, Fitzgibbon sold 70,000 NIB shares worth just under $579,000 via on-market transactions on 31 August and 1 September.

The point of these explanatory statements is to allay investors' concerns.

According to the statement:

Mr Mark Fitzgibbon has also informed the company that he sold 70,000 nib shares (which he held directly) on market on 31 August 2023 and 1 September 2023 to meet a personal income tax obligation.

Selling shares to meet personal tax obligations is not uncommon among company directors.

The chair of CSL Limited (ASX: CSL) did exactly the same thing within the past fortnight, too.

Dr Brian McNamee AO sold 21,000 CSL shares worth $5.58 million for "philanthropic purposes and to meet personal and taxation obligations".

What's the latest news from NIB?

The latest price-sensitive news from the ASX 200 health insurer was its FY23 full-year results on 21 August.

NIB reported a 10.9% boost to revenue at $3.1 billion for FY23.

It also revealed a 43% increase in net profit after tax (NPAT) at $191 million.

Investors were pleased with the report, and NIB shares ascended 4.5% on the day of the news.

NIB will pay a fully franked final dividend of 15 cents per share on 3 October.

This is 36% higher than the FY22 final dividend, representing one of the biggest dividend boosts among ASX companies this earnings season.

NIB shares are currently down 1.68% to $7.63 per share on Thursday afternoon.

Motley Fool contributor Bronwyn Allen has positions in CSL. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended NIB Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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