Director dealings are essentially insider transactions for shares between directors and the companies they work for. These dealings are always made public, and are often considered a good indicator of a company’s future prospects. However, they don’t get nearly as much attention as company news due to their complex nature. Nonetheless, here I’m breaking down this week’s director dealings for three of the FTSE 100‘s top firms.
Lloyds
The Lloyds share price had dived 2% when these transactions were reported. But that didn’t stop a number of insiders purchasing shares via the company’s share incentive plan (SIP).” A SIP is an employee plan for companies within the UK to award equity to employees flexibly. Publicly listed companies normally exercise this option because it’s tax-efficient for both the employer and its employees.
Breaking down the director dealings, it seems that all but Harmeen Mehta purchased shares via Lloyds’ SIP. Within certain transactions, there are partnership shares and matching shares. The former is an invitation to buy shares via deductions from salary pre-tax and National Insurance Contributions (NIC). The latter is an add-on to when partnership shares are offered, where a company matches the number of partnership shares of up to a maximum ratio of two-to-one. Matching shares must normally be held in a trust for at least three years, and held for five to get a full tax relief.
| Employee Name (Position) | Amount | Date of Transaction | Nature of Transaction |
|---|---|---|---|
| Harmeen Mehta (Non-Executive Director) | £8513.58 | 9/5/2022 | Acquisition of Shares |
| Antonio Lorenzo (Chief Executive, Scottish Widows and Group Director, Insurance and Wealth) | £150.06 (Partnership shares) & 103 matching shares | 9/5/2022 | SIP |
| Janet Pope (Chief of Staff and Group Director Responsible Business & Inclusion) | £124.91 (Partnership shares) & 103 matching shares | 9/5/2022 | SIP |
| Stephen Shelley (Chief Risk Officer) | £150.06 (Partnership shares) & 103 matching shares | 9/5/2022 | SIP |
| Andrew Walton (Group Corporate Affairs Director) | £29.93 (Partnership shares) & 102 matching shares | 9/5/2022 | SIP |
Rolls-Royce
Rolls-Royce had a rather eventful week. Prior to reporting its Q1 2022 trading update, the firm had a slew of director dealings that were reported on Monday and Wednesday. Most notably, a number of high profile directors and executives redeemed and offloaded a large number of shares. Under any other circumstances, this would send alarm bells ringing. Nevertheless, these sales were attributed to covering tax liabilities. As such, it shows that directors are still relatively confident in the company’s future.
| Employee Name (Position) | Amount | Date of Transaction | Nature of Transaction |
|---|---|---|---|
| Warren East (Chief Executive Officer) | 435,426 free shares | 5/5/2022 | SIP |
| Chris Cholerton (President – Civil Aerospace) | 101,679 free shares | 5/5/2022 | SIP |
| Mark Gregory (General Counsel) | 111,849 free shares | 5/5/2022 | SIP |
| Andreas Schell (CEO – Rolls-Royce Power Systems AG) | 150,809 free shares | 5/5/2022 | SIP |
| Warren East (Chief Executive Officer) | -£176,369.47 | 5/5/2022 | Cover Tax Liabilities |
| Chris Cholerton (President – Civil Aerospace) | -£41,185.41 | 5/5/2022 | Cover Tax Liabilities |
| Mark Gregory (General Counsel) | -£45,304.87 | 5/5/2022 | Cover Tax Liabilities |
| Andreas Schell (CEO – Rolls-Royce Power Systems AG) | -£65,832.65 | 5/5/2022 | Cover Tax Liabilities |
| Lee Hsien Yang (Non-Executive Director) | £980.85 | 9/5/2022 | SIP |
| Wendy Mars (Non-Executive Director) | £1820.54 | 9/5/2022 | SIP |
| Sarah Armstrong (Chief People Officer) | £150.02 | 9/5/2022 | SIP |
| Rob Watson (President – Rolls-Royce Electrical) | £150.02 | 9/5/2022 | SIP |
BP
After BP reported record profits last week, many were calling for a windfall tax on the oil giant. Such a tax would hinder future investment by the company as any profits would be heavily taxed, thus limiting its earnings potential. That being said, BP directors were unfazed. CEO and Director Bernard Looney, as well as Julia Emanuele, opted to purchase more shares under the firm’s ShareMatch UK Plan, albeit in small amounts.
| Employee Name (Position) | Amount | Date of Transaction | Nature of Transaction |
|---|---|---|---|
| Bernard Looney (Chief Executive Officer/Director) | £311.70 | 10/5/2022 | SIP |
| Julia Emanuele (Person Closely Associated with Murray Auchincloss, Chief Financial Officer) | £376.46 | 10/5/2022 | SIP |
