This ASX 300 company director just cashed out $16 million worth of shares

Should investors be worried when a CFO cashes out $16 million?

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When a director of any ASX 300 company decides to cash out shares, the usual reaction from shareholders is one of raised eyebrows.

After all, ASX directors aren't exactly amongst the lowest-paid workers in the country. And investors of an ASX 300 share like to see the fortunes of the people who are highly paid to run their companies as closely aligned as possible to their own.

But that's what investors in ASX 300 online retailer Kogan.com Ltd (ASX: KGN) are confronting today.

The Kogan share price has been on a tear over the past few weeks, thanks to a very well-received earnings report last month. Since that report was dropped on 26 February, this ASX 300 stock has rocketed a whopping 35% or so. That's including the 1% rise today thus far.

This rise put the Kogan share price up an eye-watering 89% over the past 12 months.

But a Kogan director seems to have taken advantage of this share price surge.

According to an ASX filing this morning, David Shafer made an off-market bulk sale of shares yesterday. Shafer is Kogan's chief financial officer, chief operating officer and executive director.

Shafer reportedly disposed of 2 million Kogan shares for a price of $8 each. For the mathematically challenged readers out there, that equates to a $16 million sale.

Prior to this sale, Sahfer owned approximately 5.23 million shares. As well as 1.4 million options.

Before any ASX 300 investors jump the gun, Kogan did release an explanation of this sale in conjunction with its notice. Here's what it said:

The Company notes that with no share sales for more than two and a half years, David has decided to diversify some of his investments.

He remains committed to the Company and has retained the majority of his shareholding. He also has equity-based compensation, including options to align his interests over the long term.

Should shareholders of this ASX 300 stock worry about this sale?

It is universally regarded as a good thing to have directors of an ASX 300 share (or any share for that matter) to be as financially aligned as possible with shareholders.

However, it is good financial practice for anyone to diversify their wealth, including ASX 300 directors. Having a majority of one's wealth tied up in one stock is something that no one would recommend as sound financial management.

So at the end of the day, it's up to each shareholder to make an individual decision of how they feel about this sale.

Motley Fool contributor Sebastian Bowen has positions in Kogan.com. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com. The Motley Fool Australia has recommended Kogan.com. 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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