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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerWith all the bad PR surrounding the departure of Citigroup's (NYSE: C) CEO Chuck Prince, along with Merrill Lynch's (NYSE: MER) CEO Stanley O'Neill, not to mention their huge severance packages, it's refreshing to see a company where the CEO actually puts his money where his mouth is and invests in the stock of the company he runs.
News that Wachovia (NYSE: WB) CEO Ken Thompson bought 100,000 shares this past Friday, to go along with the 37,000 he bought earlier last week, is a telling sign that not only does he pay lip service to his company's stock being undervalued, but has actually invested millions of his own dollars to back it up.
With the debate over executive compensation heating up, and investor cynicism towards CEOs at an all time high, this move buy Thompson is commendable. How many stories have we read about CEOs making large salaries, getting enormous bonuses and the stock price continues to drop?
Kudos to Thompson, and may his large investment pay off.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer holds no position in any stock mentioned as of 11/21/07.
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Reader Comments (Page 1 of 1)
11-21-2007 @ 4:57PM
Jack Bertolino said...
Ken Thompson is a great leader and a great man. With him at the helm, Wachovia is sure to bounce back. Just look at today's market results...the Dow sank 200+ points...and Wachovia went up.
Wachovia's service and reputation remain intact...and will show positive results in the long run.
11-23-2007 @ 1:21PM
bullmary said...
Mr. Thompson's move reminds me of another great leader who believed in his company. John Reed did exactly the same thing back in the 80' when C was in trouble. Mr. Thompson and Mr. Reed obviously come from the same school. Good luck to Mr. Thompson on his investment.
11-23-2007 @ 12:26PM
Jack Bertolino said...
Bullmary...WB up $2.00+...so something good is happening.
mrnjea
11-24-2007 @ 7:24PM
William Ford said...
Get your facts straight Mr.Katsman. Stan O'Neal did not receive any serverance from Merrill Lynch. What he received included cashing in on stock options that had value and which he was entitled to just like any other employee. If you want proof, go back to the Wall Street Journal of October 30th.
And yes, Ken Thompson did buy stock in his company, but so do hundreds of other corporate CEOs. 95% of CEOs are extremely intelligent, competent who work enormous amount of hours, have skills that are above 99.9% of the population and have made billions of dollars for you and other investors. If you read 10K reports, you would see that almost all CEOs own stock in their companies. They believe in their companies. Otherwise, how would they even be hired in the first place and why would they put up with the headaches and sacrifices that come with these high stress jobs?
But you and the media in general demonize these people and put in the headlines the bottom 5% so that these bottom fishers appear to be the norm. Is there any wonder that "investor cynicism towards CEOs (is) at an all time high"? A self fulfilling prophecy?
And getting back to cynicism, are shareholders unhappy with the job that Mark Hurd has done at Hewlett Packard, cleaning up the mess left by Carly Fiorina or with the CEOs at Apple, Google, Fed Ex, Caterpillar and others whose stock prices have more than doubled in some cases in the last three years.