Teck Resources CEO Jonathan Price responds to questions from reporters after the company's special meeting of shareholders, in Vancouver on April 26.DARRYL DYCK/The Canadian Press
Teck Resources Ltd. TECK-B-T chief executive Jonathan Price exercised tens of thousands of stock options early and sold the securities to book a multimillion-dollar profit, as Glencore PLC weighs making a higher takeover proposal for the big Canadian mining company.
Insider trading records show that the CEO exercised 88,715 options in Teck to buy B shares at prices ranging from $16.36 to $45.64 on May 1. He sold the same quantity of stock that same day for prices between $62.89 and $63.11. That gave Mr. Price a profit of about $3.7-million.
While insider selling of shares in a company that is the target of an acquisition proposal is generally legal, optically it can leave a poor impression.
A major reason Teck’s shares have been trading at elevated levels is because of an earlier takeover proposal from Glencore last month that was rejected by Teck. Mr. Price is among a select group of Teck insiders who are well placed to estimate whether a fresh Glencore approach might succeed, or whether it might fail, and bring the share price down with it.
“As an insider, you’re held to a different standard. He would certainly have access to information that has not been publicly disclosed,” said governance expert Richard Powers, associate professor at the Rotman School of Management.
Canadian companies generally enforce trading bans on insiders two weeks before a quarterly earnings release and two days after, to minimize the risk of allegations of illegal insider trading.
Mr. Price was one of four executives to trade in Teck shares starting on April 28, three days after the earnings were released, and two days after it called off its plans for a drastic restructuring.
The options exercised by Mr. Price were due to expire from 2030 to 2032, so he had the ability to wait many years before exercising them. The options represented more than a third of options he was holding, and more than two-thirds of options that had “vested,” or were available for him to use.
“You have to exercise caution in the exercise of any equity awards to negate the appearance of a conflict. And they haven’t done that,” said Mr. Powers.
Companies use stock options and various other stock-award programs in an attempt to tie executives’ pay to shareholders’ fortunes. Typically, they vest over multiple years.
Chris Stannell, spokesperson for Teck, wrote in an e-mail to The Globe and Mail that Mr. Price receives approximately 80 per cent of his compensation as “at-risk variable compensation,” which includes options.
Mr. Price took over from Don Lindsay as CEO of Teck last year. He’d previously been chief financial officer for just under two years.
Apart from Mr. Price, Robin Sheremeta, a 35-year company veteran who serves as senior vice-president, coal, exercised 166,250 options, paying $3.25-million for shares he then sold for $10.35-million – a $7.1-million profit.
Larry Davey, vice-president, maintenance, made a profit of $1.13-million by exercising 28,000 options and selling the shares.
Prior to 2022, Teck’s share-unit awards used multiyear shareholder return versus peers and a profit measure to calculate payouts. Last year, the company added more metrics to the plan, including cost-management numbers and sustainability measures.
While Mr. Price has about $5-million worth of shares in the company’s compensation plans, he holds no Teck class B shares outright, according to stock-sale records
Teck’s B shares closed down 2.4 per cent to $57.73 apiece on the Toronto Stock Exchange on Thursday.
Glencore last week reiterated its desire to acquire Teck, but the Vancouver-based miner has remained steadfast in its opposition to the deal.
The Swiss mining and commodities trading giant said that it may take its offer directly to Teck’s shareholders if the board doesn’t engage.